The Sackler Family Thinks It Can Pull Off the Heist of the Century
You’ve heard about Purdue Pharma, and their owners, the members of the Sackler family. You know about their false marketing of OxyContin and the ensuing opioid epidemic — you even may be tired of hearing about it. That is understandable. It’s normal to become numb to the steady drumbeat of death … death … death. You also may have heard the word “bankruptcy” in relation to Purdue Pharma and that was enough to doom the cause.
Allow me to reframe this event. It’s not a boring legal mess. It’s not a disembodied crisis. It’s not even just a massive tragedy. It’s a hold-up.
We all know the elements of a great heist: the set-up, the team, the plan and the fake. Just when you’re sure they’re failing, they turn it around & upside down; smiles spread on our well-entertained faces as we watch those who were deceived feel the hit.
Not this time.
One could argue that Purdue Pharma and its owners, members of the Sackler family, have pulled off many a heist since the late 1990s: what they’ve accomplished in bankruptcy court, however, is monumental. It makes their corruption of medicine look like child’s play.
Purdue Pharma didn’t just crash, unprepared, into bankruptcy court. Just a week after a subsidiary of the company entered into the empire’s first guilty plea in federal court, in May 2007, David Sackler fretted about the future of his family’s wealth: “We’re rich? For how long? Until which suits get through to the family?” By February 2008, his uncle Mortimer proposed exit strategies: “It is simply not prudent for us to stay in the business given the future risks we are sure to face and the impact they will have on the shareholder value of the business and hence the family’s wealth.”
They barely had enough time to transfer more than $10 billion dollars out of the company before David’s worst nightmares came true. By December 2017, Purdue Pharma and other opioid manufacturers were named as defendants in more than 2,600 lawsuits, all consolidated into a “Multi-District Litigation” before Judge Daniel Polster in the Northern District of Ohio.
Here’s where we start hitting our marks on the heist checklist.
The Set-Up: According to the family’s own WhatsApp messages, late 2017 was a time for freaking out. We’ve got the family laid low, seemingly trapped in an unfriendly court, quivering over the future of its billions, its reputation beginning to fray thanks to the efforts of Nan Goldin.
This isn’t a heist pulled off to crown a glorious career — it’s a last-ditch effort. There’s a loot to protect — the billions they’ve withdrawn from the company, as well as the billions the company made from the sale of OxyContin, and their reputations as philanthropists.
The Team:
- Former U.S. Attorney Mary Jo White, who may represent only the Mortimer Sackler branch of the owners’ family but has exercised her extraordinary access to the halls of power to the entire family and company’s benefit for more than a decade.
- Restructuring expert Steve Miller, “the Turnaround Kid,” who was hired to lead Purdue Pharma’s board in July 2018.
- On behalf of the Sackler family, we have David and Kathe Sackler, in the roles of the sad-sack, pretend-we’re-confused-while-we-rob you-blind sacrificial teammates.
- Let’s not forget the money man, Craig Landau, who has claimed a mission “to save lives” while raking in bonuses, or the extras, racking up millions of dollars in fees each month in so many high-powered law firms.
The Plan: By the time Purdue Pharma filed for bankruptcy in September 2019, they were ready. In a classic heist move, Purdue Pharma and its owners came into bankruptcy court with a well-oiled exit strategy:
- They’d made sure to land in the right court — one where their owners’ wish to be released from all future liability actually might be entertained by the right judge. That’s where we meet the Honorable Robert Drain, in the role of the crankety old-timer who pulls off the most daring tricks under the cloak of judicial authority.
- They’d already negotiated a settlement with 25 states headed mostly by Republican governors: the owners would contribute $3 billion dollars as well as the company itself, which would continue to sell OxyContin in order to fund compensation for future victims. When the time came to propose a plan and vote, that group of so-called “Consenting” states might well be enough to push it through.
And here’s the “fake”: they are profiting from the final reorganization plan, while appearing to have made concessions. In fact, there is evidence of the Sacklers’ enduring power on every page.
In bankruptcy, the reorganization plan is like a fresh contract, to replace the old contract on which the debtor has defaulted. The person who is broke or about to be broke has to rally all of their assets in order to pay off as much of their debt as possible. They get a new start, but that’s pretty much the only thing they’ll have when they walk away.
Purdue Pharma filed its reorganization plan and accompanying appendix just before midnight last night, having planted quotes already in all major publications.
“With drug overdoses still at record levels, it is past time to put Purdue’s assets to work addressing the crisis,” said Steve Miller, chairman of Purdue’s board of directors and famed “Turnaround Kid,” in a statement to major outlets. “We are confident this plan achieves that critical goal. ”
“Today marks an important step,” the members of the Sackler family added, “toward providing help to those who suffer from addiction, and we hope this proposed resolution will signal the beginning of a far-reaching effort to deliver assistance where it is needed.”
The deal is billed as a boon for Purdue Pharma’s victims and the cause of opioid epidemic abatement, generally. Here’s how it works.
The company itself survives, under the temporary name of ‘NewCo,” and gains the undeserved legitimacy of becoming a “responsible and sustainable” business. The idea is to remove profit from the company’s mission statement, and allow it to pay its settlement obligations by continuing to sell its products, including OxyContin. It’s a fresh start all right, but with “transferred assets.”
Members of the Sackler family, who are alleged to have committed fraudulent transfers amounting to $10 billion dollars out of the company before the bankruptcy filing, are increasing their contribution to $4.275 billion, from the $3 billion they offered 18 months ago. That still leaves several billions free and clear in their network of trusts.
Just like in the best heists, there isn’t just one fake: here, we’re looking at a veritable cascade of reveals:
- The company, which will allegedly “cease to exist,” will, in fact, endure, through its pipeline and management team.
- The Sackler family gets to pay their share of the settlement over NINE years, allowing them to keep the money in their bank accounts, accruing interest.
- They haven’t committed to full document disclosure.
- They haven’t revealed who would benefit from the releases of liability.
- They’re not definitively blocked from the opioid business.
- They’ve locked down individual victims to paltry payouts: a total of between $700 million and $750 million, to be divided according to a point system between more than 130,000 claims. This was the result of a mediation, overseen by Kenneth Feinberg (of September 11 Victim Compensation Fund fame) and former judge Layn Phillips, who each charged one million dollars per month for their efforts. The payout range for individual victims whose claims are deemed legitimate starts at $3,500 and tops out, for “Death from OxyContin,” at $48,000. That’s $48,000 … as in less than two years’ worth of poverty-level subsistence for a family of four.
Why do the releases matter? Think about the origin of this chart: human beings lost, harmed, hospitalized, grieved, missed, addicted, overdosed, jailed. Relegated to this form, it’s the ultimate dehumanization. None of these individuals benefited from a fraction of the high-end, zealous advocacy that brought Purdue Pharma and the Sackler family through their privileged version of an ordeal. The Sacklers never want to face the risk of a lawsuit again, ever, in any form, and so in exchange for a fraction of their ill-gotten gains, they shan’t ever have to worry again.
They’re alleged to have masterminded the company’s deceit, bribery and lies, which led to the over-prescription of OxyContin and tens of thousands of overdose deaths. Yet their victims will never have a day in court to confront them, nor will they recover anywhere near what they’ve lost.
We’re still waiting for the full list of people who will benefit from these releases, which we expect to reach beyond the core family members, but the breadth of the anticipated release is astounding (“[…] the Released Parties shall be deemed conclusively, absolutely, unconditionally, irrevocably and forever released, to the maximum extent permitted by law […] from any and all Claims, counterclaims, disputes, obligations, suits, judgments, damages, demands, debts, rights, Causes of Action, Liens, remedies, losses, contributions, indemnities, costs, liabilities, attorneys’ fees and expenses, in each case, of any kind, character or nature whatsoever […] whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, asserted or unasserted, accrued or unaccrued, existing or hereinafter arising, whether in law or equity […] sounding in tort or contract, whether arising under federal or state statutory or common law, or any other applicable international, foreign, or domestic law, rule, statute, regulation, treaty, right, duty, requirement or otherwise …”).
Can you imagine if any of the human beings who’ve been incarcerated for selling OxyContin could keep such a significant portion of their earnings and benefit from such an enduring, impenetrable legal cloak? And here’s another catch: the Plan doesn’t seem to contemplate a release from criminal liability, but it doesn’t need to. If the states are going to be dependent on the Sackler family’s ability to make payments over the next nine years, and on NewCo’s ability to continue funding their opioid abatement budget, are they really going to initiate criminal prosecutions?
In fact, in a classic final “fake,” the Sacklers may end up making money on the deal, because while they’re giving up Purdue Pharma, which is estimated to be worth $2 billion on the Sackler-friendly bankruptcy exchange, they’re required to sell off other companies they own, but they may still be allowed to keep some of the profits.
In a masterful exercise of influence, they have managed to nail down every aspect of the Plan other than what shall benefit them: you can almost hear the fees racking up as their attorneys continue to fight, with relentless zeal, to protect the Sacklers’ interests, while every other hope is deflated.
Here’s the final image: picture the friend, neighbor, community member, son, daughter, spouse, father, mother whom you lost to an opioid overdose as a result of the Sacklers’ deceitful, greedy campaign. Now take them away again and throw down a small bundle of money in their place. Replacing a human being’s life with a couple thousand dollars, when you’re walking away with billions and freedom: it’s the crime of the century.
Oh wait … there’s one more thing …
