Clinic Owner Pleads Guilty to Operating Illicit Drug Center

A 65-year-old unlicensed doctor Tuesday pleaded guilty, along with his wife and sister, to using an Anaheim medical clinic as a front for an illicit drug sales operation that sold 596,000 doses in two years.

Gerard F. Smith faces 18 years in prison and a $1.5-million fine after entering guilty pleas in Los Angeles federal court to six counts of conspiracy and sales of drugs, which included controlled substances such as diet and sleeping pills, tranquilizers and pain killers.

“Cocaine and heroin dealers aren’t the only people who distribute drugs in (the Los Angeles area),” Assistant U.S. Atty. Monica Bachner said. “The illegal distribution of controlled substances is a significant problem, and that’s why we consider this to be a significant case.”

Smith was indicted earlier this year on 76 counts of conspiracy, sales of controlled substances and fraudulent billing, among others.

“The government offered six counts out of a 76-count indictment, and even a lawyer’s mathematics tells you one is more attractive than the other,” said Bradley Brunon, Smith’s attorney.

Smith, who was described by the prosecutor as being in frail health following quadruple heart bypass surgery, had his license to practice medicine revoked in 1985 by the state Board of Medical Quality Assurance after he was implicated in a drug trafficking ring.

Smith employed licensed doctors at the clinic he operated in the 700 block of South Brookhurst Street in Anaheim. Federal authorities accused him of using valid registration numbers for his employees to make large purchases of drugs, since his own license to purchase controlled substances was lifted along with his medical license.

Federal authorities alleged that the clinic became a retail center for illicit drugs, with Smith opening it on weeknights and weekends, largely to avoid notice by the legitimate doctors on the clinic staff.

Smith bought in bulk and sold a variety of controlled drugs, such as pain killers, tranquilizers, diet and sleeping pills, according to the charges. He and his wife packaged them in unmarked vials and plastic bags for sale.

In addition, the former physician was accused of fraud in billing Medicare, Medi-Cal and private insurers for services never provided.

While the former doctor insists that not all the 76 charges were true, Brunon said that even if his client were acquitted on “90%” of the counts, “we would be no better off than we are now (in pleading guilty to six counts).”

Smith has had continuing troubles with government authorities.

In 1978, his license was suspended for 60 days, after he was found to have prescribed excessive amounts of drugs to 61 patients over a four-month period.

Smith’s license revocation three years ago followed his indictment in 1983 for selling amphetamines to a truck driver who was a former patient. The indictment was dropped after Smith’s license was suspended.

Along with Smith, his wife, Shirley, pleaded guilty to one count of distributing Talwin, a pain killer. Smith’s sister, Bernadette Butler, also a clinic employee, enter a guilty plea to mail fraud in connection with the scheme to defraud insurers.

Chief U.S. District Judge Manuel L. Real scheduled sentencing for April 25.