Houston, Texas, man was sentenced today to 360 months in prison for
multiple conspiracy and tax charges, announced Principal Deputy
Assistant Attorney General Richard E. Zuckerman of the Justice
Department’s Tax Division.
On Nov. 14, 2018, a jury convicted Kenneth J. Coleman, 52, of nine
counts, including conspiracy to commit money laundering, conspiracy to
structure currency transactions, corporate tax evasion, filing false tax
returns with the Internal Revenue Service (IRS), and failing to file
The evidence at trial established that Coleman facilitated the
fraudulent sale of second-hand prescription medications to Utah-based
Green Valley Medical Distributors, LLC (Green Valley). Coleman owned
Acacia Pharma Distributors Inc. (Acacia) and Four Corner Suppliers Inc.
(Four Corner), which purchased bottles of prescription medications from
illegitimate sources and then sold them to Green Valley, which then sold
the medications to pharmacies as brand-new.
Federal regulation requires wholesale distributors of prescription
medications to provide to a buyer a pedigree – a written statement
identifying each prior sale, purchase or trade of the drugs being sold
that includes the business name and information of all parties to the
prior transactions, starting with the manufacturer. Coleman and others
acting at his direction created false pedigrees and provided the
fraudulent documents to Green Valley. Evidence at trial showed that
Green Valley would withhold payment to Coleman until it received these
Coleman and his co-defendant, Marcus Weathersby, deposited proceeds
from the fraudulent sale of these second-hand prescription drugs into
Acacia’s and Four Corner’s business bank accounts and used the funds to
pay the suppliers of the illicit pharmaceuticals. At trial, the
government proved that Weathersby and others acting at Coleman’s
direction laundered more than $41.5 million of illicit funds, including
over $2.9 million in more than 230 cash withdrawals made in amounts less
than $10,000, in order to evade bank-reporting requirements.
Coleman also evaded the assessment and payment of Acacia’s and Four
Corner’s income tax liabilities, failed to file an individual tax return
for tax year 2011, failed to file corporate income tax returns for tax
years 2011 and 2012, and filed false individual income tax returns for
the tax years 2012 and 2013. The combined loss of corporate and
individual income taxes was more than $700,000.
Coleman’s co-defendant, Weathersby, formerly of Houston, Texas,
pleaded guilty to conspiracy to commit money laundering and was
sentenced in June 2018 to 58 months in prison. He testified at trial
In addition to the term of imprisonment imposed, U.S. District Court
Judge David Hittner ordered Coleman to serve three years of supervised
release, imposed a criminal forfeiture money judgment of $20,326,464.17,
and ordered Coleman to pay $716,986 in restitution to the Internal
Principal Deputy Assistant Attorney General Richard E. Zuckerman
thanked agents of IRS-Criminal Investigation, the Federal Bureau of
Investigation, and the Federal Department of Agriculture, who conducted
the investigation, and Trial Attorneys Sean Beaty and Terri-Lei O’Malley
of the Tax Division, who prosecuted the case. Principal Deputy
Assistant Attorney General Zuckerman also thanked U.S. Attorney Ryan K.
Patrick of the Southern District of Texas and his office for their
assistance in this matter.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.