Tong condemns multibilliondollar Purdue transfers

STAMFORD — Connecticut Attorney General William Tong rebuked bankrupt OxyContin maker Purdue Pharma on Tuesday following the release of a comprehensive report that showed about $10.7 billion in payments from 2008 through 2017 that benefited Sackler family members who own the firm, transfers Tong said misappropriated company funds.

Tong and other attorneys general asserted that the new study, which Purdue commissioned from professionalservices firm Alix Partners, corroborated their earlier accusations of financial malfeasance by the Sacklers and underlined the need to further probe the firm’s and owners’ transactions before agreeing to settle. Purdue officials responded that they had demonstrated their commitment to fiscal disclosure, while Sackler representatives denied that the owners made any fraudulent disbursements.

“The Sacklers have taken billions of dollars out of the company — we have been saying that all along,” Tong told Hearst Connecticut

Media Tuesday. “No. 2, it highlights again the need for full transparency and a full accounting by the Sacklers for every cent they took out of the company, particularly after 2007.”

In a statement, Purdue said the report showed it was “providing this exceedingly rare level of transparency to help ensure that all claimants, including attorneys general and the communities they represent, can support the settlement structure that would transfer more than $10 billion of value to the American public to address the opioid epidemic and save lives.”

In 2007 Purdue and three former executives pleaded guilty to criminal charges of misbranding OxyContin agreed to pay a total of approximately $635 million in fines.

In each year from 2008 through 2013, the distributions to family members — or tax payments on their behalf — far surpassed $1 billion, according to the report, which spans more than 350 pages and was filed Monday in federal bankruptcy court in White Plains, N.Y.

The totals decreased to less than $800 million in 2014 and 2015, $651 million in 2016 and slightly more than $200 million in 2017.

Family members received $4.1 billion in cash between 2008 and 2017. In contrast, distributions from 1995 through 2007 that benefited them totaled $1.3 billion.

Purdue did not make any cash disbursements after 2017, the report said.

“These distribution numbers were known at the time the proposed settlement was agreed to by two dozen attorneys general and thousands of local governments,” Daniel Connolly, attorney for late Purdue cofounder Raymond Sackler’s branch of the family, said in a statement. “They have been public for months, and this filing reflects the fact that more than half was paid in taxes and reinvested in businesses that will be sold as part of the proposed settlement.”

Tong responded that “taxes paid by the Sacklers are only paid if they paid themselves income. You don’t have to pay taxes if you’re a Sackler, unless you’ve taken income (from the company). They didn’t have to take that money, and I don’t think they should have.”

For months, Connecticut and 23 other “nonconsenting” states that have not agreed to Purdue’s proposed settlement terms have alleged that the company has long misdirected funds to its owners.

In court filings in October, they cited an Alix Partners consultant who testified shortly after Purdue’s Sept. 15 bankruptcy filing that the company had “paid the Sacklers $12 or $13 billion” during an unspecified period.

Earlier filings by Connecticut and other states accused the eight Sackler family members who are named in their lawsuits of siphoning several billion dollars from the firm.

“The fact that the Sackler family removed more than $10 billion when Purdue’s OxyContin was directly causing countless addictions, hundreds of thousands of deaths, and tearing apart millions of families is further reason that we must see detailed financial records showing how much the Sacklers profited from the nation’s deadly opioid epidemic,” New York Attorney General Letitia James said in a statement. “We need full transparency into their total assets and must know whether they sheltered them in an effort to protect against creditors and victims.”

Tong, James and other attorneys general in the nonconsenting group said they wanted to learn more about Purdue’s and the Sacklers’ dealings, when the judge handling the bankruptcy approved their request last month to limit a stay to six weeks on their lawsuits against Purdue.

Another hearing is scheduled for Thursday, but it is not clear whether Judge Robert Drain might approve another pause on the nonconsenting states’ cases. A broader preliminary injunction on the lawsuits — which is intended to support settlement talks — runs until April 8.

With a family net worth that has been estimated at approximately $13 billion, the Sacklers have not personally filed for bankruptcy. As part of their settlement offer, the owners have offered to pay at least $3 billion and also contribute proceeds from the sale of their international pharmaceutical businesses.