108-count indictment issued in online drug trafficking scheme
BY JOHN DORSCHNER
Knight Ridder Newspapers

MIAMI - (KRT) - Alleging that he led an ongoing criminal enterprise that raked in more than $125 million, federal prosecutors Wednesday made their first major move against online pharmacies by indicting Vincent Chhabra, 32, a big-time South Florida Internet entrepreneur, and nine of his colleagues.

The 108-count indictment issued by a federal grand jury in Alexandria, Va., focuses on charges that Chhabra and the others used many Web sites - including get-it-on-.com - to sell controlled substances, mostly diet pills, in an illegal manner because they did not require that customers first be physically examined by doctors.

Also indicted were Chhabra's sister, Sabina S. Faruqui, 30 of Weston; an uncle, Sunil K. Sethi, 48, of Virginia; a Virginia pharmacist and physicians from Ohio, Missouri, Kentucky and Virginia.

``This case is about a dangerous new spin on an old problem,'' said Paul J. McNulty, U.S. Attorney for the Eastern District of Virginia, in a prepared statement. ``Drug trafficking in cyberspace is just as harmful … as drug trafficking on street corners. The advent of the Internet does not mean doctors and pharmacists can bypass rules.''

Chhabra was arrested Wednesday at his oceanfront home in Golden Beach, Fla., and jailed, pending a bond hearing on Monday. Prosecutors are asking that he be kept in custody until his trial.

``Mr. Chhabra has been aware of this investigation for three years now,'' said his attorney, Sean Ellsworth. ``He has consistently maintained his innocence, and four times he has go the Eastern District of Virginia to surrender, and then be told they did not accept that. He looks forward to his day in court.''

Prosecutors alleged that no one bothered to check the accuracy of online questionnaires that customers filled out in order to get their drugs. But for many Internet users, the main problem with Chhabra's sites, as well as many others, is that they are major originators of spam that clog e-mail inboxes.

If convicted, Chhabra faces a mandatory 20 years for the criminal enterprise (charges) and up to 20 years for money laundering.

The indictment also seeks to recover money from several dozen bank accounts connected with Chhabra, including ones in India and the Bahamas, plus the forfeiture of 72 pieces of jewelry and 15 luxury cars - including five Mercedes, four BMWs and an Aston Martin. The feds also want to seize Chhabra properties in Wellington, Weston and Ohio, as well as take control of 13 websites that he has used to sell drugs.

In the past two years, one of Chhabra's firms has faced civil actions by federal and state authorities.

His main company was USA Prescription, which ran the Web sites, first from a storefront in Davie, Fla., and later from a Weston, Fla., office building.

He also was co-owner of RxNetwork, a Davie pharmacy that was temporarily closed in June 2002 by state authorities as a danger to the community, but was reopened by order of an administrative law judge.

In October, RxNetwork was raided by agents of the Drug Enforcement Administration. The DEA yanked RxNetwork's controlled substance license because it had filled prescriptions for diet pills for customers based solely on online questionnaires.

Three weeks later, Ellsworth announced that the pharmacy was closing because, though the Web sites offered several dozen other drugs, it couldn't make money without dispensing diet pills.

``That just shows that the controlled substances are the vast majority of their business,'' said Joe Kilmer, DEA spokesman.

The indictment alleges that Chhabra and the others started their online drug selling in Ohio in 1998. After the state of Ohio issued a search warrant for their premises in 1999, the group set up companies in Virginia ``in an attempt to hide their operation.''

The companies used pharmacies in Alabama, Florida and Louisiana to fill the prescriptions, according to the indictment.

To make it more difficult for state regulators, the indictment alleges, the Web sites had doctors write prescriptions to customers located in states other than those the physicians resided in.

The physicians indicted were Daniel L. Thompson, 48, of Ohio; William D. Thompson, 44, of Missouri; Laurence L. Cockerille Jr., 71, of Ohio; Arturo L. Portales, 44, of Kentucky; and Russell A. Johnson, 50, of Virginia.

Also named were Daniel M. Varalli, 54, a pharmacist and co-owner of Rx Direct, a Virginia pharmacy used to distribute controlled substances; and James A. Trovato Jr., 38, who operated drug-selling websites from Ohio.

Faruqui, the sister, and Sethi, the uncle, were charged with laundering the Web sites' proceeds, which totaled at least $125 million from December 1998 through June 2003, according to the indictment.

Though Chhabra is identified in corporate papers and his Web sites as Vincent K., the indictment called him Vineet K., apparently his given name.

Last month, attorney Ellsworth told The Herald that Chhabra had left the online drug business in June and sold all his Web sites to Coral Pharmaceuticals, a Bahamian company.

However, on several Internet message boards, affiliates of USA Prescription said they hadn't known about the change until they read The Miami Herald story. Affiliates are persons who use spam and other Web sites to drive business to an online pharmacy, and in return can earn a portion of sales.

It was only on the day that The Miami Herald story appeared that Carleta Carolina wrote a letter on Rx Affiliate Forum announcing she was the new president of USA Prescription. Carolina is a partner with Chhabra in RxNetwork, according to court documents filed by DEA.

``Wow, the heat must have really come down on them,'' one person wrote on the affiliate site.

At least two of the USA Prescription Web sites, eprescribe.com and clickprescribe.com, still appeared to be operating early Wednesday evening.

---

© 2003, The Miami Herald.

Visit The Miami Herald Web edition on the World Wide Web at http://www.herald.com

Distributed by Knight Ridder/Tribune Information Services.
twincities.com