Judge Bars Disclosure of Compounder's Profits

By Walter F. Roche Jr.

Boston--In a last minute reversal the judge presiding over the criminal trial of former employees of a drug company that caused a national public health crisis, barred federal prosecutors from telling jurors that one of the defendants, a part owner, earned some $20 million in profits in the six year preceding the 2012 fungal meningitis outbreak.
The order was issued earlier this week by U.S. District Judge Richard G. Stearns. He had earlier rejected a request by lawyers for Gregory Conigliaro to bar mention of how much Conigliaro, a vice president and part owner, collected from the New England Compounding Center and a related firm.
In the brief order this week granting the motion filed in Conigliaro's behalf, Stearns said he was granting the motion "There being no evidence Mr. Conigliaro stood to gain any financial advantage from NECC retaining its identity as a compounding pharmacy."
He added that government lawyers had not filed an opposition to the Conigliaro motion "suggesting anything to the contrary."
The profits came from the New England Compounding Center and a sister firm called Ameridose.
Records filed in related civil and criminal litigation show that Gregory Conigliaro made some $20 million in profits from NECC and a sister firm, Ameridose LLC, between 2006 and 2012, when both firms shutdown for good.
The closures came amid evidence that thousands of fungus contaminated vials of a spinal steroid had been shipped by NECC to health facilities across the country in 2012. Nearly 800 victims were sickened after being injected with the drug. Seventy-six of them died.
Meanwhile jurors Thursday completed their second full day of deliberations in the racketeering and mail fraud case stemming from a two-year probe of the outbreak.
Conigliaro and five other NECC employees are facing charges ranging from racketeering, to conspiracy and mail fraud.
Conigliaro faces a single charge of conspiring to defraud the U.S. Food and Drug Administration by portraying NECC as small family owned pharmacy licensed by the Massachusetts Board of Registration in Pharmacy.
While Stearns concluded there was no evidence that Conigliaro personally profited by remaining a state licensed pharmacy, several witnesses in the nearly two month trial testified that had NECC registered with the FDA as a drug manufacturer, it would have been required to meet higher and more extensive standards.
The witnesses stated that NECC was "masquerading" as a pharmacy to avoid stricter regulation.
The only hint jurors got of the income NECC generated came when federal prosecutors told jurors Conigliaro "made millions" from NECC.
Records from NECC's bankruptcy and a series of civil and criminal cases show that Gregory Conigliaro held a 10 percent interest in NECC and Ameridose. Court records show Barry Cadden, the NECC president, and his wife, who owned 35 percent of the two companies, earned $72 million during the same six year period.
A 10 percent stake would equal $20 million.
Dan Rabinowitz, Congiliaro's lawyer, had urged the judge to bar the disclosure of his client's income because "it would improperly taint the jury's ability to be fair."
Meanwhile the jurors in the case have now requested transcripts of the testimony of two prosecution witnesses in the case, Eric Kastango, a pharmacist and expert on sterile drug compounding, and Scott Connolly, a former NECC employee.
Kastango gave extensive testimony on his observations of the conditions at NECC's Framingham, Mass. and told jurors the company did not meet the standards required by a national code, known as the U.S. Pharmacopeia, for sterile drug compounders.
Connolly, who has already filed a guilty plea to 10 mail fraud charges, testified about how he worked as a pharmacy technician at NECC despite the fact that he had surrendered his registration to the state board in the midst of a separate investigation.
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