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Reselling drugs leads to prison term

A Milford woman will serve two years in federal prison for her role in an elaborate scheme in which she resold an HIV drug at marked-up prices and profited $483,000.

Beth Handy was sentenced Thursday in U.S. District Court for her role in a coast-to-coast scam that saw her transferring more than $2 million to a California attorney, Robert McFadden, who laundered most of that revenue through his clients’ trust fund, a federal prosecutor said.

Licensed in New Hampshire to sell pharmaceuticals, Handy used her legitimacy to resell the HIV drug Serostim to wholesalers across the country from February 2002 to June 2004, Assistant U.S. Attorney Mark Irish said Friday.

But the state Board of Pharmacy exposed the scam when staff noticed discrepancies in the paperwork she filed to document her sales, Irish said. One telltale error was her misspelling of Puerto Rico, he said.

The scam process started with HIV patients selling excess boxes of Serostim to three other members of Handy’s five-person outfit, Irish said.

The patients had purchased the medication legally from insurers, including California’s Medicaid system, he said.

The outfit bought nearly 3,000 boxes for as little as $650 each, Irish said. They then repackaged the boxes with false paperwork that made them appear to be purchased from authorized distributors, Irish said.

With Handy as the salesperson, the resale price was marked up to as much as $950 per box and boxes were sold to 53 customers in the wholesale pharmacy distribution chain, Irish said. The scheme grossed $2.6 million in revenue, he said.

Before transferring the sale proceeds to the money man – an attorney in Palm Springs, Calif. – Handy took a cut of $483,000, Irish said.

No one fell ill from the group’s interference in the typically secure chain of drug sales, Irish said. “When you go out of the chain of licensed sellers, you risk public health,” Irish said. “You don’t know if that drug was adulterated.”

Handy, 56, will serve two years in prison, to be followed by three years of supervised release. She was the only New Hampshire resident to participate in the scheme, Irish said.

McFadden was convicted in January in U.S. District Court in Concord. He was sentenced to three years in federal prison and then three years of supervised release.

More than $2.1 million of the revenue was funneled through McFadden’s client trust account, Irish said.

That account, Handy’s license to sell drugs and the paperwork packaged with Serostim gave the operation “the perfect cover,” Irish said.

Albert McKeon can be reached at 594-5832 or amckeon@nashuatelegraph.com.