Pharmacy Owner Serving ILWU Members Sentenced in Compounding Scheme

Erica Carey ran a pharmacy that served members of the International Longshore and Warehouse Union. Their health may be poorer for it. On October 30, 2019, Carey, owner of a Long Beach, Calif. pharmacy, was sentenced in Los Angeles federal court to three years of probation and ordered to pay more than $366,000 in restitution for defrauding the ILWU-Pacific Maritime Association (PMA) health plan. The main organizers of this $3 million-plus scam, brothers Berry and Dalibor Kabov, each had been sentenced that March to 121 months in prison for illegal sale of opioids and importation of controlled steroids, and failure to report about $1.5 million to the IRS. The actions follow a probe by the Drug Enforcement Agency, the IRS, the U.S. Postal Inspection Service, the U.S. Labor Department, and state and local authorities.

According to prosecutors, the Kabov brothers, both residents of the Brentwood section of Los Angeles, orchestrated a “years-long scheme to exploit the nation’s epidemic-level addition to powerful prescription opioids.” The pair, having begun selling mail-order drug parcels to customers in Ohio, went national after they became owners of the Los Angeles-based Global Compounding Pharmacy that sold “millions of dollars of oxycodone, hydromorphone and hydrocodone on the black market.” When wholesalers cut off Global Compounding, the Kabovs obtained a $20,000 pill press from China and began manufacturing opioid pills, acquiring enough bulk powder to make 100,000 maximum strength pills. To conceal the scam, the brothers conspired with a doctor to create fraudulent prescriptions bearing the names of identity theft victims and then falsely reporting them as “narcotics addicts” to state authorities.

Here is where the union connection comes in. In addition to these offenses, the Kabovs used the names of other identity theft victims, many of whom were ILWU members covered by the union health plan. This triggered $2.6 million in insurance payouts. The go-between here was Erica Carey, owner of Long Beach Medi-Spa. According to Labor Department investigators, Ms. Carey filled prescriptions for creams and billed the ILWU-PMA health plan. In turn, the Kabov brothers paid her kickbacks from plan assets. Between January and June 2015, Carey received about $366,000 in this manner. She eventually pleaded guilty to wire fraud and agreed to pay restitution. As for the Kabovs, they were ordered to pay a combined $350,834 to the IRS in addition to their sentences for drug trafficking, drug importation and tax fraud. “In the midst of a national opioid epidemic, these defendants used a seemingly legitimate pharmacy as a front to flood the black market with dangerous opioids for their own personal profit,” said U.S. Attorney Nick Hanna following the sentencings. Maybe now the union health plan can focus more on the health of dues-paying members.