Date: 05-04-2015

Case Style: United States of America v. Keith A. Schwartz

Case Number: 1:13-cr-00218-JLK

Judge: John L. Kane

Court: United States District Court for the District of Colorado (Denver County)

Plaintiff's Attorney: Tonya Shotwell Andrews, Alison Elizabeth Goldenberg, Mary Jo Menendez

Defendant's Attorney: Jack Kenneth Fuchs, Daniel T. Smith, Jonathan S. Willett and Michael Salnick for Keith Schwartz

Michael S. Axt and Douglas Ivan Richards for Dr. Joseph Ferrara

Nicole Christine Irby for Steven Michalek

Robert William Pepin for Karyne Smith

Scott T. Poland for Karen Plaia

Thomas Richard Ward for Melissa Toothman

Lisa Monet Wayne for Lauren Schwartz

Description: DENVER, CO -- Keith A. Schwartz, age 47, of Silverthorne, Colorado, was sentenced by Senior U.S. District Court Judge John L. Kane to serve 180 months (15 years) in federal prison for conspiracy, distribution of a controlled substance and money laundering, United States Attorney John Walsh announced. Following his prison sentence, Schwartz was ordered to serve 6 years on supervised release. Schwartz was convicted by a jury on October 24, 2014, following a 14-day trial. The jury deliberated for a day and a half before returning a verdict of guilty. Schwartz, who has been in custody since his indictment, remains in custody. Schwartz was indicted by a federal grand jury in Denver on May 22, 2013.

According to the indictment and evidence presented at trial, Schwartz, in conjunction with co-conspirators, all of but one of whom have previously pled guilty, knowingly conspired and agreed to dispense and distribute, or facilitate the dispensing and distribution of controlled substances, to patients at times and in circumstances outside the usual course of professional medical practice. He then laundered the proceeds from the patients through bank accounts in his wife’s name. The patients didn’t have a sufficient medical necessity for the prescription of the controlled substances. The primary prescription drug involved in the case was Oxycodone, with over one half million dosage units prescribed in an 18 month period.

Specifically, Schwartz, using an alias, approached a pain doctor named Kevin Clemmer in May of 2011, who at the time was housed in the Federal Detention Center in Englewood, Colorado after his indictment for the unlawful prescription of controlled substances. Schwartz offered to purchase the list of Clemmer’s patient lists, most of whom received substantially more narcotic or other controlled substance medication than was medically necessary.

That same month, after obtaining the patient list, Schwartz, and his co-conspirators, first saw Dr. Clemmer’s patients in a Holiday Inn in Wheat Ridge, Colorado, where they enlisted and worked with co-conspirator Dr. Joseph Ferrara, who was registered with the DEA to write prescriptions for controlled substances. The pain clinic eventually moved into office space, and Schwartz, who was the owner, manager, organizer and operator, had direct communications with patients regarding Dr. Ferrara’s treatment regimen. The defendant induced Dr. Ferrara to unlawfully write opioid and benzodiazepine prescriptions in large numbers to addicted patients – the amounts of which far exceeded the amount medically necessary and safe to use. In fact, the government presented expert testimony that proved that many of the controlled substance prescriptions written were up to four times the safe medical limit. As a result of the unlawful distribution of controlled substances, medication prescribed by Schwartz’s pain clinic contributed to the death of at least three patients.

The relationship among the co-conspirators began in the summer of 2009, when Schwartz recruited Dr. Ferrara to write medical marijuana recommendations to support Schwartz’s marijuana growing in his house. During 2009 and 2010, the medical marijuana business expanded to include travel throughout the state of Colorado, where Dr. Ferrara wrote medical marijuana recommendations. In May of 2011, the conspiracy shifted its primary focus to distribution of prescription controlled substances while also maintaining the medical marijuana recommendation business.

Schwartz laundered the money obtained by the pain clinic by placing it in bank accounts in corporations in the name of his wife. Schwartz used some of the illegally obtained money to purchase his $1.6 million house out of foreclosure.

“For a fistful of dollars, Defendant Schwartz stoked the epidemic of prescription drug abuse that is killing hundreds of Coloradans every year,” said U.S. Attorney John Walsh. “The painful sentence Schwartz received in this case mirrors the pain and suffering that flowed directly from his criminal conduct.”

“Prescription drug abuse is a serious problem in Colorado and those individuals that are responsible for the illegal and excessive distribution of prescription medicines need to be held accountable and brought to justice," said Barbra Roach, Special Agent in Charge of the Drug Enforcement Administration, Denver Field Division. “This is a great example of Federal and local law enforcement agencies working together to make our community a better place.”

“Because of our financial expertise, IRS CI has been involved in prescription drug abuse investigations and prosecutions around the country. In the Schwartz case IRS CI focused its financial investigative resources on the money laundering activities,” said Gilbert R. Garza, Acting Special Agent in Charge of IRS Criminal Investigation, Denver Field Office. “Thanks to IRS CI Special Agents, over $1,000,000 in assets was seized as part of the investigation, representing some of the defendant’s ill-gotten gains.”

Following the trial, he was found guilty of one count of conspiracy to distribute and dispense controlled substances, prescription drugs outside the course of usual professional medical practice, two counts of distribution and dispensing a controlled substance and aiding and abetting the same, four counts of use of a telephone to facilitate a drug crime, one count of conspiracy to commit money laundering, and 36 counts of money laundering. The defendant was found not guilty of two counts of use of a telephone to facilitate a drug crime and two counts of money laundering.

This case was investigated by the Tactical Diversion Squad (TDS) of the DEA, which includes members of the IRS Criminal Investigation, the Greenwood Village Police Department and the Arvada Police Department.

Outcome: MANAGER/OWNER OF PAIN CLINIC IS SENTENCED TO 15 YEARS IN FEDERAL PRISON FOR CONSPIRACY, DISTRIBUTION OF A CONTROLLED SUBSTANCE AND MONEY LAUNDERING

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Defendant's Experts:

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