4 ms·

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

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.

deleted 7y ago
[deleted]
loeg 7y ago
Wiring money to yourself isn't fraud.
- stefan_ 7y 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.
  - jjeaff 7y ago
    Piercing the veil isn't fraud either. But it can make you personally liable for the financial liabilities of your company.
    - hn_throwaway_99 7y ago
      The term for this is literally "fraudulent conveyance": https://en.wikipedia.org/wiki/Fraudulent_conveyance#United_States https://en.wikipedia.org/wiki/Fraudulent_conveyance#United_S...
      - malandrew 7y ago
        Doesn't fraudulent conveyance only apply if there are creditors to the debtors. In this situation, who is the creditor that was defrauded by the conveyances in question at the time of conveyance?
      - jjeaff 7y ago
        Fraudulent conveyence is not the same thing as "piercing the veil". Although it is a subset of it.
  - loeg 7y ago
    In which year was Purdue supposed to be aware of future financial liabilities that put it into bankrupcy? The deal was reached last Wednesday and yes, maybe it has been in the making for a while, but how long? The best I can deduce from Wikipedia is that a few states filed suit in May 2018 and another 30 jumped on by Jan 2019, and the earliest mention of the settlement was that it was in-progress in August 2019. The Sacklers' biggest self-payments were in 2008-2011 per the article's figure and actually got smaller in later years, with data only through 2016. It's not clear that at any point for which we have data, the Sacklers "knew" their company was facing future financial liabilities that put it into bankrupcy. Did they make self-payments from August 2019 on? I don't think the article says either way.
    - Aloha 7y ago
      I'm in agreement with you. While they might be rich, reprehensible people who made money by selling legal, but highly addictive drugs - its not as if they tried to pull money out just before a huge liability came up.
      - ethbro 7y ago
        I feel like pulling money out while you're engaged in behavior a reasonable person would assume might lead to future litigation... stretches the "We didn't know!" defense. They and others were engaged in massive production and sale of opiates, even as the news reported increasing number of opiate deaths. I'm not in favor of pinning everything on the last unlucky bastard standing around, but taking profits now when you can expect future corporate liabilities should be illegal.
        Aloha 7y ago
        Virtually any behavior might lead to future litigation - you operate within the bounds of the law, and worry about the rest later.
        loeg 7y ago
        > I feel like pulling money out while you're engaged in behavior a reasonable person would assume might lead to future litigation... stretches the "We didn't know!" defense. As the sibling comment says, anyone or any corporation with assets is a target for potential future litigation, with or without merit. That cannot be the basis for what makes profit-taking fraudulent, or companies could never pay owners a dividend. > They and others were engaged in massive production and sale of opiates, even as the news reported increasing number of opiate deaths. I basically disagree with this premise. The media reporting on opiate deaths is misleading. * IMO, production and sale of opiates is broadly a public good. To the extent that people are suffering, and opiates are an effective treatment for that pain, having opiates available is a boon. Some of the recent restrictions on prescribing due to the "crisis" are overbearing for the majority of doctors and patients, and probably cause net increase in suffering in the country. * Rate of conversion from on-label opioid prescription to addiction ("opioid use disorder") is lowish; this metastudy[1] claims 8-12% on average, but the 95% CI is anywhere from 3-17% and I'm not sure what they're measuring the percentage of (i.e., long-term prescriptions might both be more represented in the data and have higher conversion rates) — I doubt 8-12% of people who get 3 days of vicodin for their wisdom teeth extraction develop an opiate use disorder. They also point out that some studies showed misuse rates below 1% and "significant variability remains in this literature." We should expect these rates to fall as tighter prescription quantities from the last several years impact "leftover" pill rates. * The rate of conversion from prescription opioid addiction to heroin is low; 4-6% per the government.[2] * Overall opioid-involved overdose annual deaths in the US rose from 8000 in 1999 to 47600 in 2017; of those, the prescription-involved number rose by 13600 deaths (+300%), from 3400. Conversely, the non-prescription-involved deaths rose from by 26000 deaths (+465%), from 4600.[3](Figs 3-4) 26000/39600 = ~66%. (The population has also grown about 17% over that period, but that doesn't change the calculus too much.) * Therefore: the overall growth pattern in opioid deaths in the last two decades is largely accounted for by heroin and other non-Rx use, which are a tiny population with a very high (and rising) death rate. The rising death rate is mostly due to the surge in black market sale of fentanyl as "heroin."[3] (esp. figures 4-5 and associated text) (Perhaps as a result of DEA and other restriction on the supply of the relatively safer, but less dense, heroin, and restriction on supply of the vastly safer prescription opioids.) * Notably, the number of non-fentanyl-involved prescription opioid-involved deaths has actually been in decline since 2011![3] (fig. 4.), despite a rising population. Let me echo that since it's really important: prescription opioid-involved overdose, ex fentanyl, both in number and per capita rate, HAS BEEN IN DECLINE SINCE 2011! Why doesn't any news story on opioids in the US headline with that? The primary reason the overall prescription opiate-involved death rate hasn't tracked that decline is rising co-(ab)use with illicit fentanyl, and its relatively higher death rate. If we could wave a magic wand and wipe (illicit) fentanyl off the earth, our annual opioid death rate would fall by something like half. Given we don't have a magic wand, what can we do? Obviously we can't stop fentanyl from entering our borders or being synthesized illicitly here. We can (and have) leaned on illicit fentanyl-producing countries like China and Mexico to make those businesses less lucrative. We can do harm reduction things for the vulnerable population — which is mostly heroin users. We could legalize heroin with a prescription for existing addicts? Harm reduction stuff: Provide free/cheap testing for fentanyl adulteration? Make naloxone available without prescription, on the shelf, for cheap or free, and encourage businesses and residents to keep some around, even if they aren't users and don't know any users? Maybe provide monitored, safe injection sites where addicts overdosing can be assisted immediately if needed but are not arrested or forced into any overbearing programs. Maybe even supply quality- and quantity-controlled heroin to these addicts for use on-site to reduce likelihood of overdose and even allow people to taper off if they want to. /rant, sorry. Finally: > I'm not in favor of pinning everything on the last unlucky bastard standing around, but taking profits now when you can expect future corporate liabilities should be illegal. (Emphasis added.) Totally agree. The article does not say anything about taking profits now; its last figures on taking profits are from 2016. [1]: https://www.ncbi.nlm.nih.gov/pubmed/25785523 https://www.ncbi.nlm.nih.gov/pubmed/25785523 [2]: https://www.drugabuse.gov/drugs-abuse/opioids/opioid-overdose-crisis https://www.drugabuse.gov/drugs-abuse/opioids/opioid-overdos... [3]: https://www.drugabuse.gov/related-topics/trends-statistics/overdose-death-rates https://www.drugabuse.gov/related-topics/trends-statistics/o...
- munk-a 7y 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.
  - loeg 7y ago
    I agree that what you describe is fraud, but I don't believe that's what the article is talking about. To elaborate, I don't see where the article states they wired money from their company to their private accounts right before declaring bankrupcy. The article instead seems to be describing shuffling of their personal assets between accounts.
    - cptskippy 7y ago
      Originally the State's Attornies were fighting for a significant portion of the settlement to come from their personal wealth and not the company. Family's offer was just company assets and none of their personal wealth.
      - loeg 7y ago
        I don't believe your comment is responsive to the thread. My contention is that nothing in this article shows or even purports that the Sacklers committed a corporate accounting crime. Apparently people disagree with the position but I haven't seen any greatly articulated arguments why I'm mistaken. Wiring around your own lawfully obtained money isn't a crime. Taking profits from your private company that isn't facing bankrupcy (2008-2016) broadly isn't a crime. Negotiating a different deal with State's Attornies than the highest offering bid by the SA's also isn't a crime. It's not the family's lowest offer; it's the mutually-agreed settlement. There's a lot of reason not to like the Sacklers or Purdue Pharma! And there's a lot of reasons they should maybe lose some money or go to jail! Those reasons are just unrelated to the contents of this article — which is stirring up shit that looks bad to laypeople but isn't criminal.
- killface 7y 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.
  - loeg 7y ago
    > attempting to understate your wealth for purposes of liability is a huge crime. Is it? Does being more wealthy increase your liability in some way? Is the huge crime a federal or state crime, and can you point me to any reference? (I'm sure claiming to be insolvent and unable to pay a civil suit when you have hidden assets is a type of fraud. But, that is not what happened here. Forbes estimates the family's worth at about $13 billion; no one is making the claim that they are bankrupt or unable to pay settlements / judgments.) In general, in the US, wealth is private information between you and the IRS. There are judicial exceptions, certainly — you can't lie about your wealth in sworn testimony at trial, for example. But the Sacklers' suits did not go to trial — they settled outside of court. > this article is basically telling us that they're dramatically understating their wealth to minimize the settlement damage. $1 billion over a period of 10 years is not a huge chunk of $13 billion, IMO; and that's just the amounts moved a decade ago. It isn't clear all of it ended up "hidden." I'm also not sure of the mechanism by which understating your wealth minimizes settlement damage unless you actually claim insolvency.

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.

deleted 7y ago

[deleted]

loeg 7y ago

Wiring money to yourself isn't fraud.

stefan_ 7y 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.
- jjeaff 7y ago
  Piercing the veil isn't fraud either. But it can make you personally liable for the financial liabilities of your company.
  - hn_throwaway_99 7y ago
    The term for this is literally "fraudulent conveyance": https://en.wikipedia.org/wiki/Fraudulent_conveyance#United_States https://en.wikipedia.org/wiki/Fraudulent_conveyance#United_S...
    - malandrew 7y ago
      Doesn't fraudulent conveyance only apply if there are creditors to the debtors. In this situation, who is the creditor that was defrauded by the conveyances in question at the time of conveyance?
    - jjeaff 7y ago
      Fraudulent conveyence is not the same thing as "piercing the veil". Although it is a subset of it.
- loeg 7y ago
  In which year was Purdue supposed to be aware of future financial liabilities that put it into bankrupcy? The deal was reached last Wednesday and yes, maybe it has been in the making for a while, but how long? The best I can deduce from Wikipedia is that a few states filed suit in May 2018 and another 30 jumped on by Jan 2019, and the earliest mention of the settlement was that it was in-progress in August 2019. The Sacklers' biggest self-payments were in 2008-2011 per the article's figure and actually got smaller in later years, with data only through 2016. It's not clear that at any point for which we have data, the Sacklers "knew" their company was facing future financial liabilities that put it into bankrupcy. Did they make self-payments from August 2019 on? I don't think the article says either way.
  - Aloha 7y ago
    I'm in agreement with you. While they might be rich, reprehensible people who made money by selling legal, but highly addictive drugs - its not as if they tried to pull money out just before a huge liability came up.
    - ethbro 7y ago
      I feel like pulling money out while you're engaged in behavior a reasonable person would assume might lead to future litigation... stretches the "We didn't know!" defense. They and others were engaged in massive production and sale of opiates, even as the news reported increasing number of opiate deaths. I'm not in favor of pinning everything on the last unlucky bastard standing around, but taking profits now when you can expect future corporate liabilities should be illegal.
      - Aloha 7y ago
        Virtually any behavior might lead to future litigation - you operate within the bounds of the law, and worry about the rest later.
      - loeg 7y ago
        > I feel like pulling money out while you're engaged in behavior a reasonable person would assume might lead to future litigation... stretches the "We didn't know!" defense. As the sibling comment says, anyone or any corporation with assets is a target for potential future litigation, with or without merit. That cannot be the basis for what makes profit-taking fraudulent, or companies could never pay owners a dividend. > They and others were engaged in massive production and sale of opiates, even as the news reported increasing number of opiate deaths. I basically disagree with this premise. The media reporting on opiate deaths is misleading. * IMO, production and sale of opiates is broadly a public good. To the extent that people are suffering, and opiates are an effective treatment for that pain, having opiates available is a boon. Some of the recent restrictions on prescribing due to the "crisis" are overbearing for the majority of doctors and patients, and probably cause net increase in suffering in the country. * Rate of conversion from on-label opioid prescription to addiction ("opioid use disorder") is lowish; this metastudy[1] claims 8-12% on average, but the 95% CI is anywhere from 3-17% and I'm not sure what they're measuring the percentage of (i.e., long-term prescriptions might both be more represented in the data and have higher conversion rates) — I doubt 8-12% of people who get 3 days of vicodin for their wisdom teeth extraction develop an opiate use disorder. They also point out that some studies showed misuse rates below 1% and "significant variability remains in this literature." We should expect these rates to fall as tighter prescription quantities from the last several years impact "leftover" pill rates. * The rate of conversion from prescription opioid addiction to heroin is low; 4-6% per the government.[2] * Overall opioid-involved overdose annual deaths in the US rose from 8000 in 1999 to 47600 in 2017; of those, the prescription-involved number rose by 13600 deaths (+300%), from 3400. Conversely, the non-prescription-involved deaths rose from by 26000 deaths (+465%), from 4600.[3](Figs 3-4) 26000/39600 = ~66%. (The population has also grown about 17% over that period, but that doesn't change the calculus too much.) * Therefore: the overall growth pattern in opioid deaths in the last two decades is largely accounted for by heroin and other non-Rx use, which are a tiny population with a very high (and rising) death rate. The rising death rate is mostly due to the surge in black market sale of fentanyl as "heroin."[3] (esp. figures 4-5 and associated text) (Perhaps as a result of DEA and other restriction on the supply of the relatively safer, but less dense, heroin, and restriction on supply of the vastly safer prescription opioids.) * Notably, the number of non-fentanyl-involved prescription opioid-involved deaths has actually been in decline since 2011![3] (fig. 4.), despite a rising population. Let me echo that since it's really important: prescription opioid-involved overdose, ex fentanyl, both in number and per capita rate, HAS BEEN IN DECLINE SINCE 2011! Why doesn't any news story on opioids in the US headline with that? The primary reason the overall prescription opiate-involved death rate hasn't tracked that decline is rising co-(ab)use with illicit fentanyl, and its relatively higher death rate. If we could wave a magic wand and wipe (illicit) fentanyl off the earth, our annual opioid death rate would fall by something like half. Given we don't have a magic wand, what can we do? Obviously we can't stop fentanyl from entering our borders or being synthesized illicitly here. We can (and have) leaned on illicit fentanyl-producing countries like China and Mexico to make those businesses less lucrative. We can do harm reduction things for the vulnerable population — which is mostly heroin users. We could legalize heroin with a prescription for existing addicts? Harm reduction stuff: Provide free/cheap testing for fentanyl adulteration? Make naloxone available without prescription, on the shelf, for cheap or free, and encourage businesses and residents to keep some around, even if they aren't users and don't know any users? Maybe provide monitored, safe injection sites where addicts overdosing can be assisted immediately if needed but are not arrested or forced into any overbearing programs. Maybe even supply quality- and quantity-controlled heroin to these addicts for use on-site to reduce likelihood of overdose and even allow people to taper off if they want to. /rant, sorry. Finally: > I'm not in favor of pinning everything on the last unlucky bastard standing around, but taking profits now when you can expect future corporate liabilities should be illegal. (Emphasis added.) Totally agree. The article does not say anything about taking profits now; its last figures on taking profits are from 2016. [1]: https://www.ncbi.nlm.nih.gov/pubmed/25785523 https://www.ncbi.nlm.nih.gov/pubmed/25785523 [2]: https://www.drugabuse.gov/drugs-abuse/opioids/opioid-overdose-crisis https://www.drugabuse.gov/drugs-abuse/opioids/opioid-overdos... [3]: https://www.drugabuse.gov/related-topics/trends-statistics/overdose-death-rates https://www.drugabuse.gov/related-topics/trends-statistics/o...
munk-a 7y 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.
- loeg 7y ago
  I agree that what you describe is fraud, but I don't believe that's what the article is talking about. To elaborate, I don't see where the article states they wired money from their company to their private accounts right before declaring bankrupcy. The article instead seems to be describing shuffling of their personal assets between accounts.
  - cptskippy 7y ago
    Originally the State's Attornies were fighting for a significant portion of the settlement to come from their personal wealth and not the company. Family's offer was just company assets and none of their personal wealth.
    - loeg 7y ago
      I don't believe your comment is responsive to the thread. My contention is that nothing in this article shows or even purports that the Sacklers committed a corporate accounting crime. Apparently people disagree with the position but I haven't seen any greatly articulated arguments why I'm mistaken. Wiring around your own lawfully obtained money isn't a crime. Taking profits from your private company that isn't facing bankrupcy (2008-2016) broadly isn't a crime. Negotiating a different deal with State's Attornies than the highest offering bid by the SA's also isn't a crime. It's not the family's lowest offer; it's the mutually-agreed settlement. There's a lot of reason not to like the Sacklers or Purdue Pharma! And there's a lot of reasons they should maybe lose some money or go to jail! Those reasons are just unrelated to the contents of this article — which is stirring up shit that looks bad to laypeople but isn't criminal.
killface 7y 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.
- loeg 7y ago
  > attempting to understate your wealth for purposes of liability is a huge crime. Is it? Does being more wealthy increase your liability in some way? Is the huge crime a federal or state crime, and can you point me to any reference? (I'm sure claiming to be insolvent and unable to pay a civil suit when you have hidden assets is a type of fraud. But, that is not what happened here. Forbes estimates the family's worth at about $13 billion; no one is making the claim that they are bankrupt or unable to pay settlements / judgments.) In general, in the US, wealth is private information between you and the IRS. There are judicial exceptions, certainly — you can't lie about your wealth in sworn testimony at trial, for example. But the Sacklers' suits did not go to trial — they settled outside of court. > this article is basically telling us that they're dramatically understating their wealth to minimize the settlement damage. $1 billion over a period of 10 years is not a huge chunk of $13 billion, IMO; and that's just the amounts moved a decade ago. It isn't clear all of it ended up "hidden." I'm also not sure of the mechanism by which understating your wealth minimizes settlement damage unless you actually claim insolvency.