LOS ANGELES – Two brothers who owned a West Los Angeles pharmacy were found guilty by a federal jury today of operating a years-long narcotic drug trafficking, money laundering and tax fraud conspiracy that illegally sold prescription narcotics to black market customers across the United States.
Brentwood residents Berry Kabov, 46, and his brother Dalibor “Dabo” Kabov, 33, who operated Global Compounding Pharmacy, were convicted of being at the center of a scheme that illegally sold oxycodone (best known by the brand name OxyContin, but also the main ingredient in Percocet and Percodan), hydromorphone (also known as Dilaudid), and hydrocodone (commonly known as Vicodin or Norco).
The Kabovs were found guilty of conspiracy to distribute narcotics, distribution of oxycodone, conspiracy to import narcotics, importation of anabolic steroids, money laundering and subscribing to false tax returns. As a result of the guilty verdicts, Berry Kabov faces a statutory maximum penalty of 309 years in federal prison, and Dalibor Kabov faces up to 315 years.
The brothers are scheduled to be sentenced on March 29 by United States District Judge Dolly M. Gee.
“These defendants used their pharmacy as a front for drug dealing, and they used multiple bank accounts to conceal their illicit proceeds,” said United States Attorney Eileen M. Decker. “Prescription drug abuse is an epidemic in this country that causes immense harm, and the use of the pharmacy allowed the defendants to increase greatly the volume of their business and distribute narcotics around the nation. In addition to operating as de facto drug dealers, these defendants cheated the U.S. tax system by failing to report approximately $1.5 million in income while living a life of luxury.”
According to court documents and evidence introduced during a three-week trial in United States District Court, the Kabov brothers used Global Compounding to sell bulk quantities of prescription drugs to customers across the country. During the investigation, authorities seized shipments that contained thousands of hidden oxycodone pills that the Kabov brothers had shipped to customers in and around Columbus, Ohio. These customers in turn made cash deposits into Kabov-controlled bank accounts or simply shipped bulk cash to the brothers in Southern California.
To conceal those black market drug sales, the Kabovs used their pharmacy to generate records that falsely indicated that prescriptions had been filled in the names of identity theft victims.
From June 2012 through December 2014, the pharmacy ordered nearly 100,000 oxycodone pills, yet it reported only half of those pills to state authorities who track prescription drug sale. There was a 15-month period with no reporting at all, and there were shortfalls in the tens of thousands of pills when the pharmacy did file reports.
“These individuals engaged in one of the most egregious, fraudulent acts we've seen on the part of a DEA registrant. They completely exploited the system to acquire dangerous and addictive prescription drugs by legal means with the primary intent of selling them on the black market,” said DEA Special Agent in Charge Steve Comer. “This conviction should serve as a warning to others so inclined to abuse the system. In the midst of a nation-wide opioid epidemic that is taking 90 lives a day, we're leveraging all of our resources to bring illicit prescription drug traffickers like these to justice.”
In addition to the charges related to oxycodone, the brothers were found guilty of illegally importing anabolic steroids purchased from a wholesale drug distributor located in Hubei, China. The indictment details how the brothers used the pharmacy to illegally order bulk quantities of testosterone, oxandrolone and nandrolone.
On federal tax returns, the Kabovs understated their income by approximately $1.5 million. They falsely claimed to have suffered net losses in 2011 and 2012, while they were flying in private jets, staying in penthouse suites, and purchasing new luxury cars, such as a $100,000 Corvette.
“After amassing large quantities of cash from the black market sale of prescription drugs, the Kabov brothers attempted to legitimize these ill-gotten profits through the use of their pharmacy and financial institutions,” said Aimee Schabilion, Acting Special Agent in Charge of the IRS Criminal Investigation. “IRS Criminal Investigation remains committed to the investigation and prosecution of those who launder and profit from the proceeds of illegal pharmaceuticals.”
The investigation into the Kabov brothers and Global Compounding is being conducted by the Drug Enforcement Administration, IRS Criminal Investigation, the United States Postal Inspection Service, the Los Angeles Police Department, and the California Board of Pharmacy.
The case is being prosecuted by Assistant United States Attorneys Benjamin Barron and Ryan Weinstein of the Organized Crime Drug Enforcement Task Force, and Assistant United States Attorney Matthew O'Brien of the General Crimes Section.
USAO – California, Central Updated January 24, 2017
Central District of California DOJ / 17-016 / January 24, 2017