DOJ Folds Criminal Case Against Federal Express

by Michael Volkov

In another setback last week, after a contentious criminal prosecution, the government dismissed its criminal charges against Federal Express. DOJ indicted Federal Express for drug trafficking relating to shipping of illegal online pharmacy drugs and related money laundering counts.

Federal Express, unlike many corporations, decided to fight the charges and fight they did. Federal Express mounted a vigorous pre-trial assault and persuaded Judge Breyer (brother of the Supreme Court Justice) to trim the case based on the statute of limitations and other substantive claims. Federal Express also waived a jury trial, and presented the case to Judge Breyer.

The government’s last-minute decision to drop the case appeared to be in response to Federal Express’ plans to call two former DEA agents who were responsible for online prescription enforcement.

The two agents were supposed to testify about Federal Express’ assistance to the DEA in online pharmacy enforcement cases, and statements made by the agents to Federal Express representatives about the questions surrounding illegality of the online pharmacy operations. DOJ pulled the plug on the case rather than allow Federal Express to call the two agents.

DOJ had promoted its prosecution of Federal Express, claiming that Federal Express “knew” that it was shipping illegal online pharmacy products. DOJ’s case did not rest on direct and specific documentation of knowingly violating the law but rested on circumstantial evidence, rising to the level of “should have know” conduct. Like the FCPA context, such evidence is difficult to present and challenging to persuade a fact finder.

Federal Express expended significant resources on its defense. Given the reputational damage and the legal defense costs, the victory has to be bittersweet.

Many will criticize DOJ for bringing this case and watching it evaporate during its presentation to the judge. The criticism is valid. Unless there is some significant change in the presentation or availability of evidence, the government’s action here represents a stunning failure of judgment by line prosecutors, supervisors and ultimately DOJ for authorizing this prosecution. A prosecution against a company for such charges represents a significant step and should only be taken when the legal theories are tight and the evidence is strong.

When the government brings a case and losses, that in and of itself is not grounds to claim an error in judgment. You win some and you lose some – that is not the final arbiter of whether a case should have been brought.

On the other hand, and in contrast, to dismiss a case mid-stream when the defendant presents a vigorous defense is irresponsible, unless there were changed circumstances. Here, as reported, the government knew about the two DEA agents, and probably identified them to federal as Brady witnesses. It appears the e government knew about this weakness in its case but proceeded anyway. In the end, bringing the case and then dropping it midstream reflects poor judgment and management.

As a former prosecutor, I do not assume improper motives. My former colleagues and supervisors took the commitment to justice seriously and responsibly. Recent cases, however, prosecuted by the government call into question serious judgment flaws.

The government exercises considerable power in choosing who to indict and who to decline to prosecute. There is no room for “gamesmanship,” bringing cases in the hopes of securing a guilty plea. When the government proceeds in a high-profile case like Federal Express and dismisses the case mid-stream, it reflects poorly on all the prosecutors committed to ethics and integrity around the country.

My hope is that DOJ will review this case, ask the tough questions and then act accordingly. This is not case that should fade into the background without conducting such a review.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michael Volkov, The Volkov Law Group | Attorney Advertising

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Michael Volkov

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