The majority owner of the New England Compounding Center, the Framingham pharmacy blamed for a 2012 meningitis outbreak that left more than 60 people dead and hundreds ill, pleaded guilty Friday to trying to conceal financial transactions from federal regulators.
Carla Conigliaro, who owned 55 percent of the company, and her husband, Douglas Conigliaro, acknowledged they made bank withdrawals in a manner that allowed them to evade federal reporting requirements. Prosecutors are recommending they serve no time in prison.
The Conigliaros were not directly charged in relation to the meningitis outbreak, but authorities allege they began hoarding cash within 20 minutes of federal agents executing a search warrant at the pharmacy in October 2012. Over the next five months, until March 23, 2013, the couple allegedly made 144 transactions totaling $179,267, according to the original 2014 indictment in the case.
Twelve other people affiliated with the pharmacy still face charges in connection with the 2012 fungal meningitis outbreak, which sparked a public health scare across the country.
The couple, who live in Dedham and Florida, pleaded guilty Friday to only a part of their alleged scheme, under an agreement with federal prosecutors.
Douglas Conigliaro, 55, an anesthesiologist and former owner of Medical Sales Management, an affiliate of New England Compounding, pleaded guilty to one count of what is known as structuring. He admitted to making 92 structured cash withdrawals at Middlesex Savings Bank over 110 days — from Oct. 31, 2012, to Feb. 18, 2013 — totaling $119,647.60. The withdrawals were structured so they did not reach the $10,000 mark that would have required the bank to file currency transaction reports with the federal government.
Conigliaro could face a prison sentence of 12 to 18 months under federal sentencing guidelines, a calculation based on a defendant’s personal history and the severity and extent of the crimes. Prosecutors have agreed to recommend he serve no time.
Carla Conigliaro, 53, who in addition to being majority owner served as a director of the compounding pharmacy, pleaded guilty to a less severe charge of structuring, because her total withdrawals were under $100,000 over 12 months. She admitted to withdrawing $4,600.75 over 34 days, from Feb. 6, 2013, to March 12, 2013.
Carla Conigliaro could face a sentence of up to six months under sentencing guidelines, but prosecutors have agreed not to seek a prison term.
They are slated to be sentenced Nov. 1.
Their lawyer, David Meier, said they were eager to move on, calling the outbreak and what it caused “an enormous tragedy.” But, he added, the government and the judge in their case both “have made very clear throughout these proceedings that Carla and Doug Conigliaro had nothing to do with the day-to-day operations of the pharmacy or any of the crimes that may have occurred there.”
Meier noted that the couple were originally indicted on more than 20 counts, including 18 counts of criminal contempt, but were each ultimately responsible for a single count of structuring.
“Carla and Doug Conigliaro have accepted responsibility for the new charge,” he said. “They are honorable and decent people who look forward to moving on with their lives and those of their five children.”
The outbreak first caught the attention of federal health officials around August 2012. By that September, it had been traced to contaminated vials of preservative-free methylprednisolone acetate manufactured by the compounding center, which had been authorized to make drugs to meet the needs of individual patients.
Authorities later determined the pharmacy had essentially been operating as a drug manufacturer, producing drugs for broad use, and that it was operating in unsanitary conditions.
Twelve people were indicted in 2014 in connection with the contamination, including six pharmacists, the director of operations, and an unlicensed pharmacy technician. Several were charged with racketeering, meaning they ran the pharmacy like a criminal enterprise.
Prosecutors allege they committed fraud over several years by falsely claiming they followed proper rules and procedures in sterilizing pharmaceuticals, and falsely claiming they had tested drugs to make sure they were sterilized.
The indictment against those 12 alleged they knowingly sold tainted drugs to hospitals, doctors, and patients.
Two high-ranking officials, Barry J. Cadden, the co-owner and head pharmacist, and Glenn A. Chin, the supervisory pharmacist, were charged with causing the deaths of 25 people in seven states, because of the production of deadly medicines. They have pleaded not guilty, and their trial is slated for January.
The outbreak led to numerous lawsuits filed by victims of the outbreak and their families against Cadden and Chin, the compounding pharmacy, and affiliated businesses. A settlement of $200 million was reached last year, and the Conigliaros have contributed more than $24 million to a victims’ fund.
Milton J. Valencia can be reached at email@example.com.