New York Uncovers $1B in Sackler Family Wire Transfers

https://www.nytimes.com/2019/09/13/health/sacklers-purdue-opioids.html

by SREinSF • 7 years ago

193 76 7 years ago

stefan_2• 7 years ago

Sounds like the kinda fraud that makes for no-knock raids in the early morning. Of course it is difficult to make a case if you never use the laughable barrier that is judicial consent to search.

loeg15• 7 years ago

Wiring money to yourself isn't fraud.

stefan_2• 7 years ago

In every country in the world, transferring money out of a company when you are aware of future financial liabilities that put it into bankruptcy many times over trivially pierces the veil.

Purdue would immediately declare insolvency with just any one settlement. These transfers are the first big-item ticket you would be looking at.

munk-a• 7 years ago

Wiring money to yourself right before declaring bankruptcy and telling the creditors "Oh darn, I don't have any money" is absolutely a form of fraud.

Purdue is going to declare bankruptcy eminently, that is one reason the settlements here are so soft - the government is trying to get what it can before they offshore everything.

killface• 7 years ago

but attempting to understate your wealth for purposes of liability is a huge crime. this article is basically telling us that they're dramatically understating their wealth to minimize the settlement damage.

slyrus• 7 years ago

Maybe now we know who bought that $1B BTC the other day.

ethbro3• 7 years ago

"Bought" is inaccurate.

burnte3• 7 years ago

We don't know why that much BTC was moved, or by who. It could have been a sale.

save_ferris• 7 years ago

When I first heard that states were looking to confiscate $5B from the Sackler family, I was pleasantly surprised, only to find out that they’re worth more than $13B.

As long as the financial punishment don’t outpace this kind of behavior among the wealthy, it’s really just a tax on them.

state_less• 7 years ago

A financial punishment is all?

Pushing that much narcotics on people normally lands you in jail.

Iv• 7 years ago

While I totally agree that the Sacklers should be considered like a criminal organization conspiring to kill people and would deserve long jail time, there is another goal to this confiscation than punishment.

It is a way to change incentives. I don't know what part of their $13B wealth comes from opioids, but this tax made it suddenly far, far less profitable. They will make their calculation of what would have been a better course of action, but if they had found a way to stay within the law and only lost $3B in revenues, it would have been profitable.

Fines are an efficient way to regulate companies and always welcomed, even if insufficient.

Not only this is like a tax, but there is a randomness factor it: it depends on a court decision. A lot of companies are risk-adverse so such a fine can have a chilling multiplier.

geofft3• 7 years ago

I think the argument of the comment you're replying to is that it was profitable and they did make the calculation. They're left with $7B, which is a lot. It's hard to make $7B.

And the multiplier works in the other way. Because of the non-deterministic chance of whether you get caught and whether you get punished and whether all of this happens before you donate all your money to charitable causes and die, the expected value of your loss is a fraction of the fine. A truly effective penalty would fine them many times the illegal profit to account for that.

cameldrv2• 7 years ago

From what I can quickly find on the web, I'd estimate that they sold about $35 billion worth of Oxycontin. That doesn't include all of the other opioids they sold through Purdue and other affiliated companies. I'd say it's likely that the vast majority of the Sackler fortune is from Oxycontin.

If you rob a bank you can't just give the money back if you get caught, and you certainly can't just give half of it back.

hogFeast3• 7 years ago

This is confusing as hell.

So they are using financial records to claim that they are hiding assets...their evidence for this is...the financial records...that they have...already. How does that work?

And they went to the trouble of briefing against the Sacklers but don't explain what information they don't have already or aren't being given (i.e. why they believe something is being hidden). They just say: we have the records, boy there is a lot of them, we haven't gone through them all...but we know they aren't complete...the bois working hard there.

And why is the punishment related to individual wealth at all? Are limited liability companies not really limited when a state govt laywer changes their mind? If someone breaks the law then charge the person who breaks the law (the point here is a headline for a politican...which is unfortunate given that some people at the company were clearly acting improperly).

Also, transferring money to a Swiss bank account is not against the law. The lawyer quoted says it was moved offshore to "conceal" the source of money...that isn't how money laundering works. You need to move it to an account that won't report to the US authorities..this doesn't exist in Switzerland or anywhere in the world (a disadvantage of weak libel laws, I am pretty sure this would be actionable in Commonwealth law systems given how obviously erroneous and misleading the statement is).

The whole lawyer/politician thing in the US is entertaining as an outsider. It is utterly bizarre when considered using any kind of logic.

joe_the_user2• 7 years ago

Also, transferring money to a Swiss bank account is not against the law. The lawyer quoted says it was moved offshore to "conceal" the source of money...that isn't how money laundering works.

Money laundering "works" through a chain of actions whose intent is to conceal the original source of said money. Some or all of those actions might be legal in themselves, it is the intent that counts - if you know the state is after your assets and you knowingly transfer those assets to a place the state can't find them (or even, would have trouble finding them, whether or not it could technically find them), then a pattern is fairly evident even if the transfer itself is legal.

Generally, playing games to make the state's job harder once it's investigating you is going to be a crime in the US (and many other places I believe). This is because the law has never been "blind" in the sense that it only considers actions - the law has always considered intentions and efforts to get results. Putting poison in a cup by itself isn't illegal, for example. Leaving that cup anywhere someone might drink from it on the other hand winds-up in crime.

ethbro3• 7 years ago

E.g. see structuring, and the law related to

https://en.m.wikipedia.org/wiki/Structuring

Perfectly legal activities. Illegal as hell when performed with intent to evade reporting.

adrr• 7 years ago

Transferring assets to different entities prior to impending bankruptcy is clear cut fraud.

The company was charged and convicted of a felony which would pierce the corporate veil.

hogFeast3• 7 years ago

It isn't. It is called fraudulent conveyance, and it is well covered by existing law (it is not fraud, it is not a criminal act). And the issue, as the article repeatedly says, is about personal wealth.

loeg15• 7 years ago

Transferring assets to different entities prior to impending bankruptcy is clear cut fraud.

No. The transfers were (a) personal wealth and (b) a decade ago.

chris11• 7 years ago

So they are using financial records to claim that they are hiding assets...their evidence for this is...the financial records...that they have...already. How does that work?

Because they didn't get the financial records from the Sacklers. A Court would want a full financial disclosure as part of the settlement. Let's say the IRS audited a small business owner and settled with the owner for back taxes and fines. Well, the owner could have used some creative accounting to hide money, maybe contract out some work to an overseas company he controlled. This might not be illegal alone. But hiding his ownership of the overseas company could decrease the back taxes and fines he owned. So it's going to look bad for him if the IRS discovers his stake in the overseas company from his bank reporting a suspicious transaction.

roland00• 7 years ago

The point of this is misdirection sometimes known as cooking the books, where you may have financial documents that say money exist, but they documents are separate from another set of books that says money doesn't exist.

You provide the cooked books to anyone who is suing you, Uncle Sam for taxes, and so on. Of course you have another set of documents that tells you where your money is, the point of having two set of books is to use one set to lie, misdirect, be non truthful in a court of law.

-----

And Limited Liability Corporations have good faith as part of their contract as a requirement. You commit purposeful fraud and the LLC will not shield you. The term for this is known as "Piercing the Veil" / "Piercing the Corporate Veil" and when the veil is pierced your assest away from the corporation can be seized for behavior you did as an agent of the corporation.

Now what are the rules of Piercing the Veil depends on your state for each state has different rules for Limited Liability Corporations, that said all 50 states have ways to pierce the veil for it is just a settled part of common law in the US.

neeleshs• 7 years ago

This practice of different books has a nice phrase in Karnataka,India - "Ramana lekka, Krishnana lekka". Literally, "Rama's accounting and Krishna's accounting".

Rama is personification of righteousness and Krishna, while a God, is also considered mischievous.

jdkee• 7 years ago

They should be absolutely bankrupted. And criminally prosecuted.

dillondoyle• 7 years ago

I also hope society starts blacklisting: museums, society events, and NYC life. That will hurt them just as much as the money. The wife just tried to pay Courtney Love (yeah talk about drugs) 250k to attend her fashion show it's gross.

Provably false advertising = fraud. Paying DRs to prescribe and push false information = fraud/bribery. I am doubtful, but I hope the recent release of coordination comms on the Marino bill and response to block DEA enforcement of laws helps a RICO case. Imagine if all the big banks got together to figure out how to help each other get out of KYC.

And they are repeating the exact same playbook in India right as we speak. It makes me very angry.

scottlocklin2• 7 years ago

Someone tell Jeff Dean he should be ashamed of himself.

https://twitter.com/JeffDean/status/1093953731756867584

simplecomplex2• 7 years ago

Do you think doctors should be criminally prosecuted, along with the AMA? After all, they allow the prescription of OxyContin and physicians are the only ones who actually prescribe them. The FDA also regulates the sale of OxyContin.

If doctors prescribe harmful drugs without evaluating their efficacy and without questioning the marketing, aren’t they responsible ? They are ultimately the ones “pushing” OxyContin after all.

i_am_nomad• 7 years ago

Doctors have been and should be prosecuted.

loeg15• 7 years ago

If doctors prescribe harmful drugs without evaluating their efficacy

Doctors are highly trained specialists with limited time, and no, their job isn't to evaluate drug efficacy and safety. That's the FDA's job, and yes, to some extent the FDA failed here.

encoderer• 7 years ago

Is it really possible that from Me Too to Purdue to tech anti trust that we are really at the beginning of a true populist backlash against entrenched power?

I am skeptical but there are many threads spinning here.

(Also, to be clear, I think the current Warren tech-are-utilities thing is bozo)

nerdponx• 7 years ago

No. These high profile "takedowns" keeps hubris in check, and also keep the rabble happy while the rest of entrenched power carries on being entrenched and powerful.

adventured• 7 years ago

We're in the second inning actually, not at the beginning.

It started with the post great recession, Occupy Wall Street movement. That was the first major populist movement in the US in the 21st century. Even though that largely failed to result in anything draconian (fortunately), the US banking system was brought under far stricter control. The Fed with the Treasury is capable of dictating almost everything about the businesses of the large financial institutions. Today the US financial system is by far the strongest and safest financial system of any major economy. It's due in part to that populist response after the crash.

Trump's election was in fact also a massive populist backlash, against electing more of the same political dynasties (Clinton / Bush) that had come to rule the US. Trump defeated powerful, massively well-funded representatives of both entrenched dynasties to win the Presidency (which tells you just how dramatically voters were willing to reject a continuation of the old). Trump is the first populist President that the US has had in a century. Nearly every organization and individual that was part of the entrenched establishment was against Trump and he won regardless. And no matter what people think of Trump, his election will represent a permanent split with the past when it comes to the US political system. Things will never be the same, to put it mildly. AOC, as one example, is in Congress solely due to this cultural shift, new outcomes are possible (variations of Democratic Socialists were exceptionally rare in the past; they won't be rare in the near future). Obama was also partially responsible for and representative of this process that is underway; it's no coincidence he won immediately following the great recession crash, as the backlash and desire for a different direction is part of what made him possible (Hillary Clinton or McCain win that election otherwise).

jacobush• 7 years ago

Obama was also very populist. (I suspect at first he drank his own koolaid but that he was ground down from within.)

Trump is the kind of populist you get when the first one fails. Trump has many former Obama voters.

choppaface• 7 years ago

One thing missing from this narrative is that Trump lost the popular vote and that barely half of eligible voters even participated. That said, the seven faithless electoral votes do underscore a theme of disapproval during the 2016 election.

code_sloth• 7 years ago

Trump's election was in fact also a massive populist backlash

Trump lost the popular vote. It wasn't a populist backlash, it was a broken system.

fucking_tragedy• 7 years ago

No, being wealthy means that the Sacklers belong to a class that our system is designed to protect. They will not face prison time, and they will remain billionaires even after the lawsuits and settlements. The only time someone who belongs to their class goes to prison is if they fuck with another rich person's money.

New York Uncovers $1B in Sackler Family Wire Transfers

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