The federal government has seized more than $18 million from bank accounts tied to the owners of a now-defunct Framingham compounding pharmacy blamed for a deadly meningitis outbreak, prosecutors said on Tuesday.
In a statement, US Attorney Carmen M. Ortiz’s office announced the seizures from accounts connected to Barry J. Cadden, head pharmacist of the shuttered New England Compounding Center in Framingham, Carla Conigliaro, the company’s majority shareholder, and her husband, Douglas A. Conigliaro.
The trio are among 14 people who face criminal charges in US District Court in Boston in a sweeping indictment linked to the pharmacy, which has been blamed for producing tainted drugs that killed 64 people and sickened hundreds more in 20 states.
The three have pleaded not guilty.
The funds were seized in December, and warrants authorizing the move were unsealed Tuesday.
Thomas Sobol, a lawyer representing victims of the outbreak, lauded the government for the asset seizures.
“Our position from square one has been that the first priority of any recovery from the Cadden and Conigliaro families should [be] the victims of the NECC tragedy,” Sobol wrote in an e-mail. “Every indication seems to show that the Department of Justice, under the leadership of US attorney Ortiz, shares this goal. Since it appears this development adds to the funds already set aside, this is an excellent development. Well done, DOJ.”
But Christina DiIorio-Sterling, a spokeswoman for Ortiz, said in an e-mail that it is premature to discuss the future of the funds.
“The government has restrained the funds pending litigation,” she wrote in an e-mail.
“Until the litigation is complete, we cannot say with certainty how the funds will be disseminated,” DiIorio-Sterling wrote.
According to Ortiz’s office, approximately $1.5 million was seized from three accounts held by Cadden.
Those funds are part of the $18.3 million seized and are believed to be linked to mail fraud and money laundering, according to court documents.
“Among the charges that Cadden faces are 25 acts of second-degree murder as well as mail fraud, conspiracy and violations of the Food, Drug and Cosmetic Act,” Ortiz’s office said in a statement.
Lawyers for Cadden could not be reached for comment on Tuesday.
Prosecutors also said that roughly $16.8 million of the $18.3 million was frozen in accounts held by or connected to the Conigliaros.
They are charged in the criminal indictment with the unlawful transfer of assets following the 2012 outbreak, according to Ortiz’s office.
Her office said the couple allegedly “transferred millions the same month that NECC surrendered its pharmacy license and shortly before NECC’s petition for bankruptcy” and “also allegedly transferred millions more after the Bankruptcy Court issued two orders prohibiting them from transferring any assets.”
David Meier, a lawyer for the Conigliaros, said on Tuesday that the allegations against the couple are “pure fiction.”
“Carla and Doug Conigliaro voluntarily contributed $24 million to the settlement fund for the victims,” Meier said.
“Neither one of them ever disposed of any assets at the time of the settlement. Every bank account and every dollar had been fully disclosed to the bankruptcy trustee,” Meier added.
The December seizures come amid separate negotiations in federal Bankruptcy Court to distribute at least $135 million in a settlement fund to the outbreak victims, from sources including the pharmacy’s owners, insurers, and landlord, as well as companies that provided services to the pharmacy and clinics and health care providers that administered the tainted drugs.
That tentative deal was announced in December and is subject to approval by a bankruptcy judge.
Meier said that “any movements of money were done with honest intent and solely for the purpose of preserving the Conigliaros’ ability to make a major contribution to the NECC victims.”