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Fedex Faces Pill Mill Drug Trafficking Allegations

SAN FRANCISCO (AP) -- FedEx delivered packages containing illegal prescription drugs for internet pharmacies even after it noticed that authorities were cracking down on the businesses and was told that one had shipped drugs to a woman who committed suicide, prosecutors said Monday as a trial began over drug trafficking charges against the shipping giant.

FedEx knew that drugs in millions of packages it delivered over a decade were illegally prescribed but shipped them anyway because it did not want to lose millions of dollars in revenue to rival UPS, Assistant U.S. Attorney John Hemann said during his opening statement.

"They faced a choice, and the choice is to stop or go, and time and time again, they went," Hemann said at the trial in San Francisco.

The government plans to rely on FedEx emails to make its case.

FedEx has denied the charges and says it only shipped what it believed were legal drugs from pharmacies licensed by states and registered with the U.S. Drug Enforcement Administration.

In her opening statement, FedEx attorney Cristina Arguedas said the company helped investigators crack down on the two pharmacies that prosecutors say were involved in the scheme and that it was never told by the DEA not to ship for a customer.

"If FedEx was picking up from a pharmacy that was shut down by the DEA and reopened, it had a registration issued by the DEA," she said.

Arguedas also contended that a DEA agent who emailed FedEx in 2006 about the suicide did not want the company to do anything about the pharmacy that shipped the drugs, citing an ongoing investigation of the business.

The exchange was "emblematic" of the partnership between the DEA and FedEx, Arguedas said.

The trial -- nearly two years in the making -- is unusual because of the government's decision to bring drug charges against a package delivery company and for the lack of a settlement.

UPS paid $40 million in 2013 to resolve similar allegations that arose from a yearslong government crackdown on internet pharmacies that ship drugs to customers without valid prescriptions.

The stakes are high for Memphis, Tennessee-based FedEx. No FedEx officials are facing prison time, but the charges carry a potential fine of $1.6 billion.

In the early 2000s, prosecutors say, FedEx began conspiring with two internet pharmacy organizations to ship powerful sleep aids, sedatives, painkillers and other drugs to customers who had not been physically examined by a doctor.

The crux of the government's case is that FedEx knew the drugs were illegal and headed for dealers and addicts but delivered them anyway. Company drivers expressed safety concerns that FedEx trucks were being stopped on the road by online pharmacy customers demanding packages of pills, according to the U.S. attorney's office.

"It was like `The Walking Dead' your honor in some places," Hemann said, describing the customers.

FedEx is charged with distribution of controlled substances, conspiracy to launder money and other counts.

The trial could last into August before a ruling by Senior U.S. District Court Judge Charles Breyer, who will decide the case.

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