News
Release
FOR IMMEDIATE RELEASE
April 12, 2005
Federal Authorities Arrest Pain Management Clinic's Owner/Operator And Physicians-Seize $10 Million in Assets
APR 12--NEW ORLEANS, LOUISIANA - William J. Renton, Jr., Special Agent in Charge, Drug Enforcement Administration and Jim Letten, United States Attorney for the Eastern District of Louisiana, announce that on April 12, 2005 , Special Agents of the DEA, working closely with federal, state and local law enforcement including the Federal Bureau of Investigation, and the Internal Revenue Service, assisted by the Louisiana State Police, Louisiana Board of Pharmacy, Louisiana State Medical Board, Sheriff’s Offices from St. Bernard, Jefferson, Plaquemines, Terrebonne and St. Tammany, and Police Departments in New Orleans, Kenner and Slidell, have arrested the following individuals pursuant to issuance of federal arrest warrants:
CHERLYN “COOKIE” ARMSTRONG, age 45,
of New Orleans, Louisiana;
DR. SUZETTE L. CULLINS, M.D., age 43, of New Orleans,
Louisiana;
DR. JOSEPH F. GUENTHER, M.D., age 71, of Metairie,
Louisiana; and
DR. BETTY R. DE LOACH, M.D., age 66, of Kenner,
Louisiana,
for violations of Title 21, United States Code, Section 846, conspiracy to
illegally distribute controlled substances.
ARMSTRONG and CULLINS are additionally charged with violations of Title 21, United
States Code, Section 859, distribution of controlled substances to persons
under age twenty-one.
ARMSTRONG is also charged under Title 18, United States Code, Section
1956, with conspiracy to conduct money laundering to promote the
illegal distribution of
controlled substances, and with Title 18, United States Code, Section 1957,
conspiracy to conduct financial transactions in amounts in excess
of $10,000 with proceeds
known to be derived from the illegal distribution of controlled substances.
According to facts set forth in the criminal complaint filed in United
States District Court, ARMSTRONG, CULLINS, GUENTHER and DE
LOACH,
along with others
known and unknown, engaged in a sham operation whereby individuals, including
persons under twenty-one years of age, obtained, by paying cash, highly addictive
drugs under the guise of “pain management” without regard for medical
necessity. According to Title 21, United States Code of Federal Regulations (CFR),
Section 1306.04., “a prescription for a controlled substance to be
effective must be issued for a legitimate medical purpose by an individual
practitioner
acting in the usual course of his professional practice. The responsibility
for the proper prescribing and dispensing of controlled substances is upon
the prescribing
practitioner, but a corresponding responsibility rests with the pharmacist
who fills the prescription. An order purporting to be a prescription issued
not in
the usual course of professional treatment or in legitimate and authorized
research is not a prescription within the meaning and intent of Section 309
of the Controlled
Substances Act (Title 21, United States Code, Section 829) and the person
knowingly filling such a purported prescription, as well as the person issuing
it, shall
be subject to the penalties provided for violations of the provisions of
law relating to controlled substances.”
Additionally, in the affidavit, ARMSTRONG, CULLINS, DELOACH and GUENTHER are alleged to have allowed the same individual patients to receive overlapping
prescriptions from each of the three SCHERER’S Clinics. In one documented instance, over
a one hundred day period, the same person received from SCHERER’s Clinics
twenty prescriptions, each for a twelve to fourteen day supply of the heavily
abused drug combination, Hydrocodone, Xanax and Soma. Nineteen of the twenty
prescriptions were issued by GUENTHER, CULLINS and DELOACH and were often
mere days apart.
According to the affidavit, ARMSTRONG and another individual allegedly established
and utilized several corporations to deposit funds from the illegal activities
and to launder money. These corporations are identified in the complaint
as:
BELLA MIA HOLDINGS, LLC;
BELLA MIA MEDICAL CENTER, LLC;
CC ARMSTRONG COMPANY, LLC;
J. BALLARD HALL, LLC;
S.L. PREJEAN #18, LLC;
L.AMEDEE, ON ESPLANADE, LLC; and
THE BALLARD COMPANY, LLC.
On April 11, 2005, seizure warrants were executed against seventeen (17)
bank accounts belonging to ARMSTRONG, SCHERER’S MEDICAL CENTERS, and other listed
corporations initiating federal forfeiture proceedings under 21 United States
Code, Section 881. The commercial real estate housing SCHERER’S CLINICS,
MIA’S PHARMACIES and other commercial and residential properties which
were allegedly purchased by ARMSTRONG with drug proceeds were encumbered
and are also the subject of federal forfeiture proceedings. The value of
all monetary
seizures from banks exceeds $4 million.
To further the investigation, this morning, Tuesday, April 12, 2005,
federal, state and local law enforcement officers executed eight (8)
federal search
warrants including:
the residence of ARMSTRONG, New Orleans, Louisiana;
SCHERER’S PAIN MANAGEMENT CLINIC, 72 Westbank Expressway, Gretna,
Louisiana;
SCHERER’S PAIN MANAGEMENT CLINIC, 2622 Metairie Lawn Drive, Metairie, Louisiana;
the law office of an attorney, located at the Metairie clinic;
SCHERER’S PAIN MANAGEMENT CLINIC, 560 Oak Harbor Drive, Slidell, Louisiana;
MIA’S PHARMACY, LLC, a/k/a MIA’S PHARMACY #1, 2628 Metairie Lawn Drive, Metairie, Louisiana;
MIA’S PHARMACY SLIDELL, LLC, a/k/a MIA’S PHARMACY #2, 560 Oak Harbor Drive, Slidell, Louisiana; and
THE MEDICINE SHOPPE, 4021 Ponchatrain Drive, Slidell, Louisiana.
Searches executed by Special Agents additionally yielded approximately
$1.3 million in cash.
Additionally, Assistant U. S. Attorneys have obtained temporary restraining
orders (TROs) restricting the sale of related properties presently totaling
an estimated $5 million.
As part of a U. S. Department of Justice and Drug Enforcement Administration
initiative to combat the proliferation, diversion and abuse of pharmaceutical
drugs, a federal search warrant was executed at MICHAEL’S DISCOUNT
PHARMACY, 2401 Veterans Blvd, Suite 19, Kenner, Louisiana. DEA officials
also served an administrative notice of immediate suspension of the registration
to possess and dispense controlled substances to that pharmacy, because
the pharmacy determined by DEA to have committed such acts which would
render their registrations inconsistent with the public interest. Immediate
suspension of the controlled substance registrations of THE MEDICINE
SHOPPE, MIA’S PHARMACY #1 AND MIA’S PHARMACY #2 were also
served on the proprietors of those establishments. The DEA registration
allowing CULLINS, GUENTHER and DE LOACH to issue prescriptions for controlled
substances was likewise immediately suspended.
Jim Letten, United States Attorney for the Eastern District of Louisiana,
and William J. Renton, Jr., Special Agent in Charge, Drug Enforcement
Administration, speaking to the arrests and searches, made this joint
statement:
“
Today’s arrests of physicians and the Scherer Pain Management Clinic
owner/operator, as well as the $5 million in monetary seizures, searches
and restraint of $5 million worth of real property, is a significant
landmark in the culmination of the initial phase of a high impact investigation,
led by Special Agents of the DEA, to attack and significantly restrict
the wholesale illegal dispensation and distribution of dangerous pharmaceutical
drugs under the guise of legitimate ‘pain management.’ The
extreme danger and actual harm produced by these clinics, operators,
and physicians, as well as associates and others like them, cannot be
overstated. As a result of the illegal proliferation of a wide spectrum
of highly addictive and dangerous controlled substances, untold numbers
of individuals in our communities - including children under 18 years
old - are endangered and harmed daily. It is thus critical to the U.
S. Department of Justice, the Drug Enforcement Administration, the Federal
Bureau of Investigation, the Internal Revenue Service, and our extraordinary
partners in state and local enforcement that all of our available assets
are brought to bear to identify and attack the problem.
Today’s landmark events, including the arrests of three doctors - is only the beginning of what will be a long, continuing and aggressive investigation and campaign to bring such individuals to justice, and to deter others from illegally profiting at the expense of the health and safety of our citizens.”
The U. S. Attorney reminds citizens that an arrest is an accusation, and that every defendant so charged is, under our Constitution, presumed innocent until proven guilty. Pursuant to federal law, ARMSTRONG, CULLINS, GUENTHER AND DE LOACH will be required to appear before a United States Magistrate Judge today at 2:00 P.M. At that time, Assistant U. S. Attorneys will request that these individuals not be released but rather be detained under federal law until indictment, trial or other disposition of the federal charges.
Supervision of the prosecution of this investigation is being handled
by Assistant U. S. Attorney Tony Gordon Sanders.