By Walter F. Roche Jr.
BOSTON- Assets of a former drug company executive could soon be going on the auction block as a federal judge has issued a $7.5 million forfeiture order against Barry J. Cadden, who already is serving a nine year prison sentence following his conviction on racketeering and fraud charges.
The order from U.S. District Judge Richard G. Stearns comes as federal prosecutors have moved to force Cadden to pay $73.7 million in restitution to victims of the 2012 fungal meningitis outbreak caused by contaminated drugs shipped by Cadden's company, the New England Compounding Center.
Stearns five-page order makes clear that the forfeiture order is separate from any restitution order the court may eventually approve. Nor will the forfeiture order be considered as a credit against any restitution.
The action against Cadden comes even as the trial against his codefendant, Glenn Chin, continues in Stearn's court room. Prosecution witnesses testified that a variety of NECC drugs were found to be contaminated with bacteria and fungus in the days and months leading to the deadly fungal meningitis outbreak.
In his order, Stearns rejected the request by federal prosecutors to order the forfeiture of $13.2 million because that figure included profits earned by his wife, who was a part-owner of the now defunct drug Framingham, Mass. compounding firm.
Originally the U.S. Attorney had sought a $132.8 forfeiture order, but lowered the request as a result of a recent U.S. Supreme Court ruling limiting the amount of forfeiture that can be imposed in a racketeering conviction.
As Stearns noted the forfeiture now must be limited to assets obtained by a defendant as a result of the criminal activity. Prosecutors had originally sought an order recovering all of NECC's income dating back to the beginning of the racketeering conspiracy.
Stearns noted that while Cadden owned 17.5 percent of NECC, his wife owned an equal share and prosecutors had attempted to lump together both of their earnings from the company.
Records show Cadden owns three adjacent parcels in Wrentham, Mass. assessed for nearly $1.8 million and an oceanside home in North Kingston, R.I. he purchased for nearly $800,000 in 2009.
In testimony in Stearns' 7th floor court room Thursday, Tiffany Hyde, testified about the testing her Oklahoma firm, ARL, performed for NECC.
Under questioning by Assistant U.S. Attorney George Varghese, Hyde described the fungus that tests of NECC products produced.
"I had never seen a fungus like that," she said in explaining why she took a picture of it. Her picture was displayed for the jury.
She said the fungus was white with filaments along the edge. It subsequently turned partially black, Hyde said.
She identified a series of documents detailing testing done by ARL for NECC and the subsequent results. She said NECC would invariably submit a single sample for a sterility test, even though industry standards required that the samples be increased based on the number of vials in the overall batch.
She was also questioned extensively about the amount of time required for the sterility testing results to be considered reliable.
She said that while NECC was given preliminary results after three days and seven days, results could not be considered final until at least 14 days had passed. In some cases yet another four days is needed.
Hyde testified that when she informed NECC that some of its samples had tested positive for bacteria,
NECC's quality control manager responded in an email, ordering that no more testing be performed and stating that the whole batch would just be discarded.
In other testimony, a pharmacist from Decatur Memorial Hospital in Illinois, said she only learned after the fact that a cancer treatment drug sold to the hospital by NECC in 2012 was compounded with an ingredient that had expired five years earlier.
"You don't use expired products," she said when asked if she would have ordered the drug had she known about the expiration date.
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