United States Drug Enforcement Administration

LOS ANGELES - A medical doctor who served as the face of a sham Los Angeles clinic pleaded guilty today to federal drug trafficking and money laundering charges connected to her illegal distribution of the powerful painkiller best known by the brand name OxyContin.

Dr. Madhu Garg, 64, of Glendora, pleaded guilty to one count of illegally distributing oxycodone and one count of money laundering for transferring the proceeds of criminal activity to a Malaysian bank account.

Garg pleaded guilty before Untied States District Judge John A. Kronstadt, who scheduled a sentencing hearing for May 26. As a result of today’s guilty pleas, Garg faces a statutory maximum sentence of 30 years in federal prison.

Garg was arrested in January 2015, along with the other operators of the now-defunct Southfork Medical Clinic in Los Angeles. A federal grand jury indictment charged seven defendants with conspiring to sell medically unnecessary prescriptions for drugs that included oxycodone, (commonly sold under the brand names Vicodin, Norco and Lortab), (best known by the brand name Xanax), (a muscle relaxant sold under the brand name Soma) and promethazine with (a cough syrup sold on the street as “purple drank” and “sizzurp”).

As part of her guilty plea, Garg admitted that she issued prescriptions for those drugs to Southfork “patients” at the instructions of the owner of the clinic, Jagehauel Gillespie, and that she knew the “patients” did not actually need the drugs. In a plea agreement filed in United States District Court, Garg “acknowledges that she intentionally prescribed the drugs outside the usual course of professional practice and without a legitimate medical purpose.”

 “The abuse of prescriptions drugs continue to take a horrific toll on public health and safety in our communities,” said Stephen G. Azzam, Acting Special Agent in Charge of DEA’s Los Angeles Field Division. “The DEA will continue to work with our partner agencies to identify and investigate doctors who are using their medical licenses to illegally deal drugs.”

Records maintained by the State of California show that Garg issued more than 10,000 prescriptions for controlled drugs - the vast majority of which were for hydrocodone or alprazolam - over the year-long period that she worked at Southfork.  Financial records show that, over the same time period, Garg received more than $300,000 in cash and transferred more than $90,000 to bank accounts held in Thailand and Malaysia.

“Doctors are duty-bound to do everything they can to protect the health of their patients,” said United States Attorney Eileen M. Decker. “Issuing prescriptions for powerful and addictive drugs for no medical purpose undermines this basic principle. Medical professionals who violate federal law by trafficking narcotics put lives at risk and compromise our health care system.”

During the investigation, Garg issued prescriptions for oxycodone and promethazine with codeine to undercover agents on eight occasions. During one of the meetings, Garg gave a prescription to an undercover witness, and then Garg agreed to issue a new prescription to the witness the following week under a false name.

The conspirators also used Los Angeles as a base of operations to acquire and deliver bulk shipments of prescription drugs to Texas, according to court documents. Furthermore, according to court records, Garg continued to assist Gillespie in acquiring oxycodone from international wholesalers even after the Medical Board of California revoked Garg’s license in December 2013.

“When doctors abuse their professional license for financial gain they put the public at risk, in
this case by dispensing highly addictive controlled substances,” stated IRS Criminal Investigation’s Special Agent in Charge Erick Martinez.  “IRS Criminal Investigation is proud to contribute our financial expertise in an effort to halt the illegal sale and distribution of prescription drugs.”

Previously in this case, five of the other defendants have pleaded guilty, including Gillespie, who was sentenced by Judge Kronstadt in November to six years in federal prison. One other defendant is pending trial, which is scheduled for later this year.

The investigation into Garg was conducted by the Drug Enforcement Administration’s Los Angeles and Houston field divisions, IRS - Criminal Investigation, the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, the California Department of Justice, and the Texas Department of Public Safety.