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Financial Crimes
03/28/2013

Medical center 'pumped' more than $10 million in narcotic pills onto interstate black market

Medical center 'pumped' more than $10 million in  narcotic pills onto interstate black market
Medical center 'pumped' more than $10 million in narcotic pills onto interstate black market

NEW YORK – A Manhattan doctor and 48 other individuals were arrested this week as a result of a long-term prescription pill investigation. The arrests stem from an investigation by: U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), Drug Enforcement Administration (DEA), New York City Police Department (NYPD) and the New York State Health Department's Bureau of Narcotic Enforcement (BNE).

Hector Castro, 51, an internal medicine practitioner and founder/medical director of Itzamna Medical Center, and his office manager, Patricia Valera, aka Patricia Rodriguez, were indicted and arrested in connection with widespread illegal trafficking of oxycodone in New York, New Jersey and Pennsylvania.

Another 47 individuals were arrested this week, including the leaders of two major drug trafficking networks in Pennsylvania, as a result of a long-term investigation known as Operation Cuba Libre. Agents seized 30 guns in a series of court authorized searches, including two in New York and 28 in Pennsylvania.

"Doctor Hector Castro and his staff allegedly abused their trusted positions as medical professionals to illegally distribute prescription drugs for a profit," said James T. Hayes Jr., special agent in charge of HSI New York. "HSI and its law enforcement partners work diligently to target the illicit distribution of narcotics that jeopardize the safety of our communities."

Castro and Valera are believed to have carried out two separate prescription-related criminal schemes that together resulted in the diversion of well over 500,000 narcotic pills worth at least $10 million onto the black market.

The schemes are the subject of two indictments: one against Castro and the second against Valera, her husband Hector Rodriguez and three other defendants who were arrested in New York and New Jersey Tuesday. The other 43 arrested defendants are charged in Pennsylvania.

As a result of the investigation, Castro is charged with illegally selling 39 prescriptions for a controlled substance for $125 each, including 28 prescriptions sold to an undercover agent. Agents and investigators arrested the doctor at his home Tuesday. Court authorized searches of Castro's home and office resulted in the seizure of approximately $20,000 in cash from a lock box, as well as medical records and computer equipment.

The investigation revealed an extensive interstate network of narcotics traffickers who got prescriptions for pills from Castro and Valera. Notably, the New York State Department of Health cannot track prescriptions filled out-of-state through its Prescription Monitoring Program (PMP).

Between September 2011 and February 2013, New Jersey pharmacies dispensed nearly 500,000 pills of oxycodone based on over 4,500 prescriptions originating from Castro's Manhattan office. In New York, pharmacies dispensed approximately 75,000 pills based on approximately 600 similar prescriptions between August 2009 and January 2013. During the course of this investigation, the street price for a 30 milligram oxycodone tablet was between $20 and $30.

Valera is charged with carrying out her own forgery and criminal diversion scheme. She faces 464 charges stemming from 155 prescription sheets that she stole from Castro and then forged and sold for $500 per sheet. Many of the 155 forged prescriptions for controlled substances were purchased by two competing prescription drug trafficking rings in Pennsylvania.

Both Valera and her husband, Hector Rodriguez, who assisted her in the scheme, were arrested at their home in the Bronx Tuesday. Agents conducted a search of their home and seized a loaded handgun, approximately $8,000 cash and blank prescription sheets belonging to Castro and his physician brother.

Investigators believe Valera was responsible for at least 713 prescriptions for narcotic painkillers in New York, New Jersey and Pennsylvania between August 2009 and March 2013. These prescriptions would have netted her a minimum of $356,500 at a rate of $500 per prescription.

Also arrested on Tuesday morning were three of Valera's customers: Euclides Valdez and Ranody Cruz in New York, and Savier Polanco in New Jersey. Agents seized a loaded handgun from a fourth individual who was present in Valdez's apartment at the time of his arrest. The individual is charged separately in a criminal complaint.

In conjunction with the New York arrests, the Pennsylvania Attorney General's Office is prosecuting another 43 drug traffickers, including John Romagnolo and Bryn Stevenson, the heads of the two competing prescription drug trafficking organizations in Pennsylvania to whom Valera supplied prescriptions. Romagnolo and Stevenson used their respective drug trafficking networks to fill the prescriptions and distribute the pills in Pennsylvania.

These 43 Pennsylvania arrests represent the largest prescription drug-related takedown in Pennsylvania's history. This parallel investigation was spearheaded by the Pennsylvania Attorney General's Office.

Hector Castro

The investigation into Castro's alleged prescription sales began in late 2011, when an individual suffered a fatal oxycodone overdose in Middlesex, N.J., and authorities discovered a pill bottle with Castro's name on the label at the scene. The deceased individual had received a prescription from Castro just a day earlier. Additionally, intelligence revealed that a number of prescription drug trafficking organizations in Union County, N.J., had been obtaining narcotic painkiller prescriptions in Castro's name since early 2011.

Because so many of Castro's prescriptions for oxycodone were being filled in New Jersey, they failed to raise red flags for New York State's PMP. However, the overdose and the high volume of street sales related to Castro's prescriptions in New Jersey ultimately caused the doctor's scheme to unravel. The Woodbridge Township (N.J.) Police and the Union County Prosecutor's Office alerted officials to this suspicious activity.

The investigation into distribution of oxycodone prescriptions from Castro's office revealed that in 2012 as many as 100 different individuals were visiting on a regular basis to obtain illicit prescriptions for narcotic painkillers. Each person was charged $125 per prescription. In an effort to slow down foot traffic at the medical center, drug crews began sending point-people to purchase multiple prescriptions at a time, rather than requiring each individual named on a prescription to appear at the doctor's office. The prescriptions were then filled at pharmacies in New Jersey, where the distribution of pills also occurred.

On May 30, 2012, while the investigation into Castro's illegal prescription sales was underway, the doctor was convicted on tax charges filed by the Manhattan District Attorney's Office. Castro pleaded guilty and served 12 days in jail. As soon as he was released, he resumed his illegal prescription business.

In August 2012, after months of interviews, surveillance and other investigative work, an undercover agent successfully infiltrated one of the New Jersey prescription drug trafficking organizations and began making visits to Castro's office on behalf of the drug organization. The undercover agent visited Castro's office eight times between August 2012 and January 2013 and purchased 28 prescriptions for 30 milligram oxycodone. At $125 per prescription, Castro received $3,500 from the undercover agent.

The doctor never performed any physical examinations on the undercover agent or referred him for medical tests. During each visit, Castro sold the undercover agent an average of four prescriptions – one in the undercover name and the others in the names of individuals who were not present. The names and dates of birth of the purported patients were provided to Castro by the undercover and/or the drug organization via a text message.

Castro faces 39 counts of selling a controlled substance. He pleaded not guilty at an arraignment where bail was set at $500,000.

Patricia Valera

Even as Castro was allegedly selling prescriptions to New Jersey drug traffickers, his office manager Valera had her own criminal diversion scheme underway. Law enforcement initiated the wiretap investigation centered on Valera in October 2012, after receiving information from BNE and the Pennsylvania Attorney General's Office that Valera was suspected of supplying illegal prescriptions to drug crews.

During the wiretap investigations in New York and Pennsylvania, agents reviewed thousands of calls and text messages between Valera and her two main customers, Romagnolo and Stevenson, the leaders of two large, competing prescription drug trafficking crews operating in Pennsylvania.

The investigation revealed that Valera stole blank prescription sheets from both Castro and his physician brother, forged the prescriptions and then sold the individual sheets for approximately $500 each. Valera supplied the oxycodone prescriptions to the two Pennsylvania organizations, as well as smaller groups in New York and New Jersey.

The pill distribution networks supplied Valera with the names and dates of birth that were to appear on the prescriptions, often via text message. The buyers also coordinated with Valera to make sure she was present in the medical office when forged prescriptions were presented at pharmacies. In the event a pharmacist called the doctor's office to verify a prescription, Valera would be the one to pick up the phone and confirm it. These drug traffickers in turn are believed to have sold the oxycodone pills primarily to teenagers and young adults.

Rodriguez assisted his wife by delivering prescriptions to Stevenson in Pennsylvania. An indictment contains 464 charges against Valera stemming from 155 prescriptions for narcotic painkillers, which she forged and sold between August 2011 and January 2013. At the rate of $500 per prescription, she and Rodriguez pocketed approximately $77,500 for these prescriptions alone.

Investigators believe Valera and Rodriguez spent their ill-gotten gains on frequent vacations, gambling in casinos and luxury goods. Since the summer of 2012, the couple travelled to France and Italy, the Dominican Republic, Cancun and Florida.

Both Valera and Rodriguez pleaded not guilty.

Pennsylvania drug organizations

Romagnolo and Stevenson were arrested at their homes in Monroe County, Pa., and are being prosecuted by the Pennsylvania Attorney General's Office. In addition, 41 members of the Romagnolo and Stevenson drug crews were also arrested. Agents seized a total of 28 firearms during court authorized searches.

Twelve of these firearms were seized from a wooded compound in Cresco, Pa., where Romagnolo and several relatives reside in close proximity to one another. A search of Romagnolo's residence yielded a shotgun, a handgun and a rifle. Agents seized a small arsenal of four handguns, four rifles and one shotgun where Romagnolo's mother and brother reside. Agents also recovered numerous pill bottles from the houses.

The wiretap investigation revealed that from March 2011 to December 2012, the Romagnolo and Stevenson organizations filled over 500 prescriptions in 100 different names. These organizations illegally obtained over 75,000 tablets of 30 milligram oxycodone, which were distributed in Monroe County.

Romagnolo would drive from Pennsylvania to New York City approximately three times per week and purchase two or three prescriptions at a time from Valera. Valera and Romagnolo communicated by cellphone to set up their prescription transactions.

On some occasions, Valera would alert Romagnolo to when the doctors were away or busy with patients and he would come down to the office. At other times, Valera would slip out of the office to meet Romagnolo or one of his runners, or leave the prescriptions with the doorman.

Romagnolo typically dropped off cash on his trips to New York City or paid Valera via Western Union. Between March 2011 and December 2012, Romagnolo paid Valera $30,400 via Western Union alone. In most cases, Romagnolo filled the prescriptions in Pennsylvania, although some prescriptions were filled in Manhattan and New Jersey.

Bryn Stevenson preferred to have his prescriptions delivered. Rodriguez typically drove to Pennsylvania to meet with Stevenson. These prescriptions were filled in Monroe County.

Violence erupted during the course of the investigation. In December 2012, a close associate of Stevenson's was shot in a Pennsylvania incident that is believed to have been drug-related. This shooting remains under investigation by law enforcement.

Romagnolo and Stevenson each employed dozens of 'runners' or 'fillers,' whom they used to fill the prescriptions at pharmacies. Both drug crew leaders relied heavily on the participation of their family members.

Romagnolo and Stevenson, with the help of Valera, kept track of when and where prescriptions were filled, so as not to draw the attention of pharmacies or law enforcement. The people filling the prescriptions either paid with cash or utilized private insurance or publicly funded medical assistance. Romagnolo and Stevenson paid the runners in cash or pills.

The investigation revealed that Valera's forgeries resulted in more than 500 prescriptions for controlled substances from Castro or his brother, which were filled in Monroe County. Many pharmacies in the area ran out of oxycodone, or refused to fill oxycodone prescriptions, because the demand was so great from these competing networks.

Pharmacists in Pennsylvania alerted authorities to the suspicious number of prescriptions coming in from Castro's Manhattan office.