SOARES DEFENDS STEROIDS CASE

Albany prosecutor cites factual errors in federal ruling; rejects bias claim

BRENDAN J. LYONS SENIOR WRITER
Section: Main,  Page: A1

Date: Sunday, September 12, 2010

ALBANY -- Prosecutors have asked an Albany judge to forge ahead with a criminal trial for five Florida pharmacy operators accused of being at the center of an alleged illegal steroids business.


It's a part of a case that drew national interest in 2007, but that has since brought attacks on the Albany County district attorney's office.


The remaining criminal case, which targets the pharmacist-owners of Orlando's former Signature Compounding Pharmacy, has languished for three years following an interstate law enforcement raid in February 2007 -- spearheaded by Albany County prosecutors -- that exposed illicit steroid use by professional athletes and others.


More than 15 people, including doctors and business owners, pleaded guilty to related drug charges in a case that exposed systemic abuse of prescription drug laws. But the case against the pharmacists and their managers, who were also targets of a related federal criminal investigation, has thrust a spotlight on District Attorney David Soares' decision to indict operators of a faraway company that did a small percentage of its multimillion-dollar business in Albany County and New York state.


An Albany County judge threw out the first indictment against the pharmacy's operators two years ago, citing prosecutorial missteps in the grand jury proceedings. A month later, the pharmacists fought back with a federal civil rights lawsuit in Florida seeking millions of dollars in damages for false arrest and malicious prosecution. They sued Soares, an assistant district attorney, the Orlando Police Department and other law enforcement officials.


But their criminal case in New York was not over. Earlier this year a state appellate court reversed a portion of the county judge's dismissal order that barred prosecutors from bringing a new indictment, which they did in June.


Last month defense attorneys for the five Signature defendants asked the same judge who dismissed the first case, Albany County Judge Stephen W. Herrick, to do it again. This time, they claimed similar grand jury problems and also pointed repeatedly to a scathing analysis of the investigation last June by a federal judge in Florida, whose ruling has the civil rights lawsuit on course for a jury trial in Florida.


"Soares not only participated in, but directed (assistant District Attorney Christopher) Baynes and others to violate plaintiffs' Fourth Amendment right to be free from unlawful arrests," wrote the federal judge, Gregory A. Presnell. "Rather than wait for any documentary evidence that plaintiffs had committed a crime in New York and comply with the very limited requirements of federal and state extradition statutes, Soares decided to orchestrate Plaintiffs' arrests without valid New York warrants and, in the process, garner significant media attention."


Last week, Christopher D. Horn, special counsel to the Albany County district attorney, filed a 34-page motion that seeks to uphold the latest 33-count indictment. It also accuses the federal judge of making numerous factual errors. Horn's written statement marks the first detailed response to Presnell's searing criticism of the Albany district attorney's investigation.


Prosecutors and investigators have publicly characterized Signature pharmacy as a prescription mill that manufactured many of its own drugs, including steroids, that were marketed to people through "wellness clinics" that did a large volume of business through the Internet. Several people convicted in the case admitted they set up clinics that funneled prescriptions to Signature, which mailed drugs around the country. Some of the clinic operators said they paid doctors to write prescriptions for people who were never evaluated in person, and who had no legitimate medical need.


The case, especially the fallout of its exposure of illicit drug use by athletes, shook up the pro sports world. It also was cited by former Sen. George L. Mitchell in his 2007 report on illegal steroid use in Major League Baseball.


While Signature's defense team has characterized their clients as law-abiding pharmacists who were victims of a zealous prosecutor, others convicted of dealing with them have cast doubt on that assertion.


Last year in Rhode Island, Orlando businessman Victor Martin Effron pleaded guilty to federal charges related to the illegal importation of human growth hormone from China. Federal authorities said the product was being sold to Signature pharmacy, which had contracted Effron to smuggle the drug into Florida, and marketed as approved for use by the Food and Drug Administration.


Orlando police, who were an integral part of the Signature case, asked Albany's prosecutors four years ago to join their investigation after building a criminal case from wiretaps, cooperating witnesses and evidence collected from trash bins outside Signature's pharmacy. They solicited the interest of Soares, according to court records, because the company dispensed prescriptions in New York, which has some of the strictest prescription drug laws in the nation.


Still, defense attorneys have countered that Soares, known from his position as district attorney for the state capital, only became involved to thrust himself into a national spotlight. They said the new charges should be dismissed, or a special prosecutor appointed, because Soares' office has a conflict due to the related federal civil rights lawsuit that has gained traction in Orlando.


Horn, who also handles appeals for the office, countered last week that appointing a special prosecutor would set a precedent for criminal defendants to disqualify prosecutors from pursuing cases by suing them, then claiming there is a conflict.


"The defendants had been being prosecuted for the same criminal conduct for well over a year prior to the filing of their federal civil lawsuit," Horn wrote in the motion to Herrick. "Now the defendants argue that the filing of a fifth indictment is evidence of bias born of the 'conflict' which the defendants themselves manufactured. They are in no different position than they were before they filed their lawsuit. They were being prosecuted then and they are being prosecuted now."


The defendants, three of whom are licensed pharmacists in Florida, are: Naomi Loomis, 37, her husband, Robert "Stan" Loomis, 59; Kenneth Michael Loomis, 62, who is Robert's brother; former business manager Kirk Calvert, 40; and former business manager Tony Palladino, 34.


Horn's motion also attacks key sections of the federal court order, and notes that days after Presnell ordered the civil case to proceed, the judge abruptly issued a corrective order dismissing the claim against a former state Health Department investigator, Mark Haskins, who had played a key role in the Signature investigation.


Presnell's order from June heavily criticized Albany prosecutors, highlighted Soares' lack of experience personally prosecuting felony cases, and questioned whether probable cause existed for the Orlando arrests. The judge also rejected requests by Soares to have testimony from a New York pharmacy-law expert, Jeffrey Fudin, who submitted a detailed report saying Signature's operators had broken multiple New York laws and committed ethical violations.


"Dr. Fudin would do well to stick to with the practice of pharmacy and leave legal matters for lawyers, judges and juries," Presnell wrote.


Presnell also questioned the fact Soares' office has no written policies or procedures; and whether his interest in the case was fueled by the intensive news coverage it received. "The raids were conducted in the presence of the media and highly publicized; certain plaintiffs were directed to come to Signature so that they could be 'perp walked' and the New York district attorney held a press conference in which he connected Signature to professional athletes," the judge wrote.


The judge's order incorrectly stated the Times Union published its first story minutes before the raids. In fact, the Times Union published nothing on its website until Orlando television crews, flocking to the raid in downtown Orlando, began phoning-in reports from the scene.


A second expert retained by the district attorney's lawyers in the federal civil lawsuit was Howard Relin, who teaches law courses at the Rochester Institute of Technology and is a former Monroe County district attorney. Relin, who prosecuted hundreds of felony cases, said it was not unusual for district attorney's offices to not have written policies. Relin concluded "the Albany County district attorney's office did not violate ethical and law enforcement standards in its investigation and prosecution of Signature pharmacy."


"Instead of prosecuting low-level local drug dealers, the district attorney had an opportunity to investigate and prosecute doctors and pharmacists who were making millions of dollars in the distribution of steroids and a variety of other classified substances," Relin's eight-page report states. "It was clear that a network of doctors were prescribing such drugs without the slightest concern for professional standards."


Relin also addressed Soares' decision to allow embedded coverage of the case by the Times Union and Sports Illustrated, both of which had learned of the investigation months before it was made public. The Times Union's interest in the story began in late 2006 when two Texas residents implicated in the case were indicted and arraigned in open court in Albany. They later pleaded guilty.


"As a district attorney learns that the press has discovered a highly confidential investigation he or she has very limited options," Relin wrote. "You can let them publish a story and have your investigation ruined or work with the media to hold off publication until after the warrant is executed by giving them an exclusive story. District attorneys do that on a regular basis."


Still, Relin is not expected to testify. On July 1 the judge granted a request by Signature's lawyers to strike Relin's report and testimony. "In short, there is nothing of relevance in Mr. Relin's report or testimony," Presnell wrote in a two-page order.


On the issue of false arrests, Horn's motion says the federal judge wrongfully concluded the Albany prosecutors did not possess valid arrest warrants when the Orlando pharmacy was raided.


Horn said the warrants, signed by Herrick two weeks before the Orlando raids, were valid even though they referenced the wrong date of the indictment on which they were based. The warrants refer to a grand jury indictment issued on Jan. 25, 2007, rather than a corrective superseding indictment that was issued on Feb. 1, 2007. Horn said "any error regarding a date in the warrant itself is purely ministerial" and that Herrick, under state law, is required to sign a warrant for any sealed indictment.


The federal judge also said prosecutors erred by changing the specific counts charged in the superseding indictment, thereby invalidating the warrants. But prosecutors said the second indictment was clarified an enterprise corruption charge, and that the counts were identical.


"We now find ourselves in the position of having this erroneous factual recitation used against the people in (1) a decision of the court, (2) a summary judgement decision for a federal lawsuit and (3) a motion to disqualify the (district attorney) and dismiss the indictment," Horn wrote.


Reach Lyons at 454-5547 or by e-mail at blyons@timesunion.com.