Pharmacy owner charged with illegally distributing oxycodone and operating a health care fraud and kickback scheme
NEW YORK CITY - Raymond P. Donovan, special agent in charge of the New York Field Division of the Drug Enforcement Administration, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, Scott J. Lampert, special agent in charge of the New York Office of the U.S. Department of Health and Human Services, Office of Inspector General, and James P. O’Neill, commissioner of the New York City Police Department, announced today the arrest of Michael Paulsen, the owner and operator of a pharmacy located in Staten Island. The Indictment unsealed today charges Paulsen with conspiring to illegally distribute oxycodone, committing health care fraud, and providing “kickbacks” to customers from Medicare and Medicaid reimbursements to induce them to obtain substances from his pharmacy. Paulsen will be presented before U.S. Magistrate Judge James L. Cott later today. The case is assigned to U.S. District Judge Paul A. Crotty.
DEA Special Agent in Charge Donovan said, "Opioid abuse is America’s deadliest enemy killing more than 130 people daily. It is alleged that lives were endangered every time Michael Paulsen opened Regal Remedies’ front or back door to peddle non-prescribed opioids. Working with our local, state, and federal partners, DEA’s priority is to investigate those responsible for pushing diverted pills, heroin, and fentanyl into our communities.”
As alleged, the defendant abused his position as a pharmacy owner and his access to controlled substances for his personal gain, directly contributing to the glut of highly addictive opioids flooding the streets of the New York City area. Now he faces justice for his contribution to the opioid epidemic plaguing our communities," said U.S. Attorney Berman.
HHS-OIG Special Agent in Charge Scott J. Lampert said: “Fueled by greed, opioid fraud schemes have devastated many communities around this country. We will continue to work with our law enforcement partners, and all available resources will be used to thoroughly investigate such alleged crimes," said Lampert.
NYPD Commissioner O’Neill said, "Opioids have a well-known history of destroying lives and devastating communities and this is why the NYPD and its law enforcement partners work relentlessly to bring to justice those who traffic them and seek to profit from them illegally. I want to thank the investigators and prosecutors who worked on this case - it is their dedication and hard work that keeps our communities safe.”
"Drug diversion is a criminal act that shows zero regard for the safety and well-being of consumers and the insurance industry. Thanks to the excellent investigative work by DFS in coordination with DEA's Tactical Diversion Squad, the alleged perpetrator for this senseless act has been apprehended," said Superintendent of Financial Services Linda A. Lacewell.
According to the allegations in the Indictment :
From approximately March 2016 to September 2019, Paulsen, who owned and operated a pharmacy in Staten Island, conspired with others to unlawfully distribute thousands of oxycodone pills to individuals who Paulsen knew had no legitimate medical need for them, in exchange for lucrative cash payments.
In total, Paulsen ordered for his pharmacy more than 170,000 oxycodone pills from pharmaceutical suppliers. However during the same period, Paulsen’s pharmacy dispensed approximately only 62,000 of those oxycodone pills with a prescription, or slightly more than one-third of the oxycodone pills that were ordered.
Paulsen instead distributed significant quantities of oxycodone pills to the pharmacy’s customers, including his co-conspirators, who either did not have a prescription or had fraudulent prescriptions, in exchange for thousands of dollars. Paulsen knew that at least some of those oxycodone pills would be resold at the street level. Paulsen is not a registered pharmacist and is not authorized to distribute controlled substances such as oxycodone in New York State.
While operating his pharmacy, and in connection with his unlawful distribution of oxycodone pills, Paulsen also perpetrated a scheme to defraud Medicare, Medicaid, and other insurance providers. Paulsen instructed customers of his pharmacy to order particular products that were not medically necessary. Paulsen then billed Medicare, Medicaid, and other insurance providers for reimbursements for those products, and provided a portion of those reimbursements as financial compensation to the customers.
Paulsen, 41, of Staten Island, is charged with one count of conspiring to distribute and possess with the intent to distribute oxycodone illegally, which carries a maximum sentence of 20 years in prison; one count of committing health care fraud, which carries a maximum sentence of 20 years in prison; and one count of paying kickbacks to induce individuals to purchase items under a Federal health care program, which carries a maximum sentence of 10 years in prison. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentence would be determined by a judge.
Berman praised the outstanding investigative work of the DEA’s New York Tactical Diversion Squad, which comprises agents and officers from the DEA, the NYPD, the New York State Police, New York State Department of Financial Services, New York National Guard, New York City Department of Investigation, and New York State Department of Health Bureau of Narcotics Enforcement. Mr. Berman also thanked the HHS-OIG and the New York City Human Resources Administration for their work on the investigation.
Parts of this case were conducted under the auspices of the Organized Crime Drug Enforcement Task Force, a partnership among federal, state, and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations and those primarily responsible for the nation’s illegal drug supply.
The prosecution of this case is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Elinor Tarlow and Daniel Wolf are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
 As the introductory phrase signifies, the entirety of the text of the Indictment, and the description of the Indictment set forth herein, constitute only allegations, and every fact described should be treated as an allegation.