Massive Prescription Drug Diversion Ring Operating Out of New York Grocery Broken Up by Feds

Six people have been indicted and Joaquin Grocery in the Bronx is shuttered after investigation alleges store was purchasing various prescription drugs from impoverished locals for resale to street users and local pharmacies.

A Bronx New York grocery has been closed and several people involved in its operation indicted on charges the grocery store operated as a contraband pharmaceuticals reseller, according to a report from the Department of Justice (DOJ).

The DOJ further alleges that Joaquin Grocery “has operated for years as a marketplace for Medicaid Beneficiaries to sell their Medicaid-reimbursed prescription medication, including Oxycontin, Percocet, and expensive HIV medications. The successful drug trade at the Joaquin Grocery has led to numerous acts of violence both inside the store and in its immediate vicinity.”

In March 2014, Bronx News 12 reported 4 men were sought in a robbery and shooting at Joaquin Grocery. The 4 suspects entered the store wearing masks, and maced employees, according to the report. This echoed a 2010 crime reported by the DOJ wherein a former competitor of the grocery was shot twice in an attempt to stop him from stealing drug diversion customers from Joaquin Grocery.

According to the DOJ, the defendants allegedly used a small room in the back of the grocery store as a place to hold their drug transactions with Medicaid patients. Pain medications such as Oxycontin and Percoset were amassed for resale on the street. More expensive medications, such as those for HIV, had their labels removed with lighter fluid and were resold to local pharmacies. Indigent drug sellers were paid cash for their prescriptions.

The DOJ also reports that the search of the store and a “stash house” used by defendants yielded over 1,000 bottles of prescription medications, plus hundreds of loose pills, lighter fluid and cotton balls used for removing pill bottle labels, and thousands of dollars in cash.

According to the DOJ, defendants Carlos Paniagua, Jose Osvaldo Paniagua Jr., and Joan Torres were arrested June 23rd. Jose Osvaldo Paniagua Sr. surrendered to authorities the same evening. Jose Borgen-Reyes was already in custody in Burlington County, New Jersey, and will be transferred to federal custody at a later date. The 6th suspect, Jose Rafael Paniagua, remains at large.

FBI Assistant Director-in-Charge George Venizelos said: “As alleged, the defendants placed their own financial gain over the public’s health and safety. They defrauded Medicaid and the U.S. taxpayers while threatening the health of patients whose prescriptions were filled with diverted, mishandled and repackaged medications. We will continue to work with our law enforcement partners, including the NYPD, to prevent the illegal sale and misbranding of pharmaceuticals.”

This case is being investigated by NYPD and the FBI ’s Health Care Fraud Task Force. The case is being tried by the Office’s Violent and Organized Crime Unit and Narcotics Unit. Assistant U.S. Attorney Russell Capone is in charge of the prosecution. 

By S. Imber