Google executives knowingly allowed a Mexican pharmacy to advertise anabolic steroids and other bodybuilding drugs to customers in the United States according to the government informant used to set up the bust. Federal prosecutors alleged that this was the case of a corporate entity, and not merely a couple of rogue customer service employees, making the decision to promote illegal pharmacies. Google paid a $500,000,000 forfeiture, the largest in history, when they entered into a nonprosecution agreement with the government.
Anabolic steroids played a major role in the government’s case against Google. Federal investigators used a convicted con artist, who had previously created a steroid pharmacy website based in Mexico, to help them bring down Google.
The con artist who helped the feds was named David Whitaker. Whitaker had operated a website that sold iPods and other consumer electronics below market-value. He collected millions of dollars from customers, never shipped the merchandise and fled to Mexico where he set up a steroid pharmacy catering to bodybuilders in 2006.
Whitaker was arrested in Mexico and extradited to the United States in 2008. He was indicted on charges of wire fraud, conspiracy and commercial bribery in the iPod case and faced up to 65-years in prison. That was when Whitaker made his final big sales pitch when he told the government how he used Google’s AdSense to sell anabolic steroids and human growth hormone to customers in the United States. He told the government that Google helped him sell steroids to U.S. customers without a prescription and that they were shipped from Mexico. And he could prove it.
The government used Whitaker to pose as the agent behind the Mexican-based steroid pharmacies SportsDrugs.net and NotGrowingOldEasy.com. SportsDrugs.net was set up to look “as if a Mexican drug lord had built a website to sell HGH and steroids” according to Whitaker.
Google initially rejected the advertisements submitted to the Adsense program. However, Whitaker found a way to bypass the automatic verification system and talk to Google ad executives on the phone. Google executives worked closely with Whitaker to bypass the internal verification system and start promoting the steroid pharmacies. The steroid pharmacies initially only allowed customers to order steroids by submitting a form but eventually included direct links to purchase product.
The government collected over four million pages of internal emails, documents and witness testimony in their case against Google. The evidence included dozens of recorded phone calls and emails correspondences between Whitaker and Google in which the illegal activity was described in some detail.
Google was aware that U.S. customs had often seized steroid shipments shipped from Mexico and that the owner of one steroid pharmacy dreamed of becoming “the biggest steroid dealer in the United States.” Even the Google co-founder and future Chief Executive Officer was aware of the steroid business.
“We simply know from the documents we reviewed and witnesses we interviewed that Larry Page knew what was going on,” according to Peter Neronja, the United States Attorney District of Rhode Island, who was responsible for the investigation.
Nonetheless, Google may not have actually violated the law. While Google acknowledged they played a role in advertising illegal pharmacies, it should be noted that Google did not plead guilty. The $500,000 penalty was not considered a criminal fine or civil monetary penalty. Instead, it was classified as a forfeiture.
Google had no involvement whatsoever in the actual introduction or delivery of pharmaceuticals into the United States. But the government still accused Google of being an accomplice to the crime by allowing steroid pharmacies to advertise on Adsense. The government believed that Google’s role was similar to that of the companies that actually shipped illegal drugs.
Such a position on accomplice liability by the government clearly could have been open to challenge if the case ended up in court. However, a settlement was likely the best arrangement for both parties. Google could avoid a highly embarrassing expose of their internal operations in court and the government could avoid scrutiny on their position on accomplice liability while collecting a nice half-billion dollar forfeiture for their efforts.
Meanwhile, Whitaker escaped a potential 65-years in prison and was sentenced to 6 years for his extraordinary cooperation in the case.
Source:
Catan, T. (January 25, 2012). Con Artist Starred in Sting That Cost Google Millions. Retrieved from http://online.wsj.com/article_email/SB10001424052970204624204577176964003660658-lMyQjAxMTAyMDIwNTEyNDUyWj.html
Henning, P. (August 30, 2011). Behind Google’s $500 Million Settlement With U.S. Retrieved from http://dealbook.nytimes.com/2011/08/30/behind-googles-500-million-settlement-with-u-s/
