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Page 2 - OxyContin: Under attack, drug maker turned to Giuliani
Credit for damage control
Asa Hutchinson , the director of the Drug Enforcement Administration in 2002, hardly needed an introduction to Mr. Giuliani. So it was perhaps not surprising that Purdue chose Mr. Giuliani as the person to meet with Mr. Hutchinson at a time when the drug maker was under intense scrutiny by the D.E.A.
“You need to have somebody who has clout to get in the door to legitimately make your presentation,” said Jay P. McCloskey, a former United States attorney in Maine who until recently worked for Purdue as a consultant.
By 2002, Mr. Giuliani was already helping to raise money for a D.E.A. museum, and his firm was part of a $1 million Justice Department consulting contract to advise it on reorganizing its major drug investigations.
The D.E.A. was not only critical of how OxyContin had been marketed, its inspectors had found widespread security and record-keeping problems at the company’s manufacturing plants.
Several top D.E.A. staffers were recommending that the agency impose severe sanctions against the drug maker, including possible restrictions on how much OxyContin it could make.
At two meetings, the first at Giuliani Partners in early 2002, Mr. Giuliani and Purdue’s executives argued that they were already taking steps to eliminate any problems.
Mr. Kerik had been sent to Purdue’s manufacturing plants to revamp internal security, they assured Mr. Hutchinson. The federal investigators, they argued, should back down and give them a chance to prove they could handle the problem on their own.
After the meetings, Mr. Hutchinson, who generally did not get involved in individual investigations, asked D.E.A. officials several times to brief him on the inquiry, Laura Nagel, the official in charge of it, has said in previous interviews. She declined to comment for this article.
D.E.A. officials say Mr. Giuliani ultimately did not affect the inquiry’s course. But Purdue Pharma did succeed in favorably resolving the matter. In 2004, it paid a $2 million fine to settle the D.E.A. record-keeping charges without admitting any wrongdoing. The sum was far smaller than the amount first recommended by Ms. Nagel, which one former D.E.A. official said was $20 million.
By the time of the 2004 settlement, it appeared that Purdue, with Mr. Giuliani’s help, had averted any significant damage. As the tide was turning, the drug maker’s top lawyer, Howard R. Udell, gave credit to Mr. Giuliani.
“We believe that government officials are more comfortable knowing that Giuliani is advising Purdue Pharma,” Mr. Udell said in a promotional brochure put out by Giuliani Partners. “It is clear to us, and we hope it is clear to the government, that Giuliani would not take an assignment with a company that he felt was acting in an improper way.”
Parents not persuaded
The limits of stature, though, were evident in Mr. Giuliani’s dealings with Mr. Brownlee, the federal prosecutor from Virginia, whose case against Purdue had been viewed by the company more as a nuisance than a threat.
It is easy to see how lawyers for Purdue might have underestimated the prosecutor. He ran a small office with 24 lawyers to cover 52 far-flung counties. But two of those lawyers, working out of a satellite office in the tiny town of Abingdon, Va., near the Tennessee border, had been investigating Purdue since 2002.
They had issued some 600 separate subpoenas and collected millions of company documents. The case stretched the office’s resources so thin that state prosecutors had to be deputized to handle other federal cases.
By comparison, Purdue’s defense team comprised all-stars, including Mr. Giuliani, Mr. Connolly and Mary Jo White , a former United States attorney in New York.
Mr. Giuliani had been advising Purdue about how to respond to Mr. Brownlee’s inquiry since its start in 2002, including reviewing documents the company had released in response to his subpoenas. And he shared the defense team’s view that Mr. Brownlee did not have any evidence to link the company to crimes, several of those lawyers said.
Early last year, however, Mr. Brownlee told Purdue that he was prepared to indict it and three top executives, including Mr. Udell, the lawyer. The company then handed Mr. Giuliani his most crucial assignment, to talk Mr. Brownlee down.
His selection was not by chance, company representatives said. They figured Mr. Brownlee, a younger federal prosecutor, would look up to Mr. Giuliani, who became a legend as a United States attorney in New York.
Between June and October 2006, Mr. Giuliani met or spoke with the prosecutor on six occasions. During those conversations, Mr. Giuliani was cordial but pointed in arguing against what he felt were flaws in the case.
Mr. Brownlee would not change course, though, even when the Purdue legal team appealed, unsuccessfully, at the 11th hour to his superiors at the Justice Department in Washington.
In October 2006, Mr. Brownlee told Mr. Giuliani and Purdue that he expected to ask for a grand jury indictment by the end of the month. Plea discussions ensued and Mr. Brownlee ultimately agreed that the three executives would not have to do jail time.
By this time, Mr. Giuliani was actively planning his presidential bid, as well as tending to other clients. On the day the legal team completed the plea deals with Mr. Brownlee, Mr. Giuliani was in Germany, giving a talk to business leaders.
He had a conference call with prosecutors for about a minute, but there really was not much left to discuss, except the weather.
“He said that it was raining,” Mr. Brownlee recalled.
In May, Purdue and its executives, after spending tens of millions of dollars to repair the company’s image, agreed to plea deals to avoid a trial. Together, they paid $634.5 million in fines and payments.
After years of denial and a high-profile public relations campaign, the company was forced to admit that it had misled doctors and patients. But to the parents of young people who had died getting high on OxyContin, the absence of jail time was evidence of Mr. Giuliani’s influence.
They voiced that view inside and outside the packed courtroom in Abingdon where the men were sentenced in July.
Mr. Giuliani was 360 miles away at the time, campaigning in Myrtle Beach, S.C., where he met with local firefighters and talked about 9/11. But his role in the case had been so substantial and sustained, the presiding judge felt compelled to address the parents’ concerns.
“It has been implied that because Mr. Giuliani is a prominent national politician, Purdue may have received a favorable deal from the government solely because of politics,” said the judge, James P. Jones of United States District Court. “I completely reject this claim.”
Even today, some of those parents are not persuaded. Ed Bisch, whose son died of an OxyContin overdose, said that he believed that Purdue got a free pass for years thanks to Mr. Giuliani.
“It was all because of Giuliani,” said Mr. Bisch. “And he got to take the money.”
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