Judge Questions Racketeering Charges Against Insys's Kapoor

(Bloomberg) -- A federal judge questioned whether prosecutors can make racketeering charges stick against Insys Therapeutics Inc. founder John Kapoor and other officials accused of bribing doctors to prescribe the company’s opioid-based painkiller.

U.S. District Judge Allison Burroughs challenged U.S. Justice Department prosecutors Tuesday to show how allegations Kapoor and other Insys executives used money and dinners to bribe doctors to boost sales of their Subsys painkiller would support a charge of racketeering, a statute created in the 1970s to help the government crack down on the mafia and other organized-crime outfits.

The prosecutors allege Kapoor and other subordinates were using speaker’s fees to bribe doctors and finding ways to evade the U.S. Drug Enforcement Agency’s reviews of suspicious drug orders. The officials also are charged with conspiracy and fraud.

“I don’t mean to suggest you were crazy to bring the case,’’ Burroughs told the government later in the hearing in Boston. “The indictment has a core of conduct that is problematic and may be criminal. That’s what a trial is for.”

Beth Wilkinson, Kapoor’s defense attorney, said she shared Burroughs’s doubts about the validity of the racketeering charges and asked the judge to throw them out.

“They don’t have the evidence to show this nationwide conspiracy,’’ said Wilkinson, a former federal prosecutor. Allowing the case to go forward would subject the defense to “unbelievable prejudice,’’ Wilkinson said.

Assistant U.S. Attorney Nathaniel Yeager said the racketeering charges against Kapoor, former Insys CEO Michael Babich and other executives are unique, but said the government has sufficient racketeering evidence to make its case.

“I understand the court’s not happy with the charging decision we made, but the evidence is there to back it up," he said. Kapoor met with bribed doctors and was involved in creating the conspiracy to jack up sales, he said.

Burroughs said she’d rule later on the dismissal motions.

The case is U.S. v. Babich et al, 16-cr-10343, U.S. District Court, Massachusetts (Boston).

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