The storefront pharmacy off Santa Monica Boulevard didn't seem like an average West L.A. drug store.
Customers rarely if ever showed up to fill prescriptions, federal authorities say. There were no over-the-counter products for sale. And Global Compounding Pharmacy reported filling only 30 prescriptions a day, an unusually low number for a business in a high-rent area near Brentwood.
The pharmacy, federal prosecutors now allege, was a facade for a booming black market prescription drug and steroids ring that helped the two brothers who owned the business pay for a lavish lifestyle of luxury hotels and trips by private jet.
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Berry Kabov, 44, and Dalibor Kabov, 32, were arrested Thursday and pleaded not guilty to a 40-count indictment that charges them with drug trafficking and money laundering.
Authorities allege that Global Compounding supplied illegal drug markets with prescription pain medication across the United States. A search warrant affidavit unsealed Thursday said the brothers' business was the top purchaser of oxycodone among pharmacies in Los Angeles from January through May 2014, tripling the amount bought by the second-largest purchaser.
As they were bringing in more than $1.5 million in cash, federal prosecutors say, the brothers were telling the IRS that the business was making little in profits or losing money.
"They claimed to be paupers when they were living like kings," said Assistant U.S. Atty. Ryan Weinstein.
Attorney Steve Meister, who is representing Berry Kabov, said his client is innocent. He declined to discuss the specific allegations, saying that he had yet to read the indictment.
"He will be fully exonerated," Meister said of his client.
Dalibor Kabov's lawyer could not be reached for comment.
The search warrant affidavit said the brothers launched Global Compounding in 2012 with pharmacist Michael Lowe, whose license allowed the business to buy large quantities of oxycodone and hydrocodone from a wholesaler.
In early 2012, investigators in Ohio arrested a local drug trafficker who told authorities that Berry Kabov routinely sent him 2,000 to 3,000 oxycodone pills each week, according to the search warrant affidavit. Prosecutors say Kabov is a bodybuilder who met the drug dealer through the sport.
The drug dealer agreed to cooperate and began recording telephone calls and coordinating drug buys, authorities allege.
On the calls, Berry Kabov made multiple incriminating statements, including some about setting up Global Compounding to facilitate drug trafficking, according to the affidavit. The Ohio-based dealer set up a drug buy with Berry Kabov in May 2012, the affidavit said.
The parcel contained 1,000 pills concealed with various foods and a note saying, "Get well soon," the affidavit said.
Customers made cash deposits into bank accounts controlled by the brothers or simply shipped cash back to Los Angeles, court records allege. More than $1 million in illegal cash deposits were made into the accounts, the affidavit said.
Surveillance showed that the brothers were often at the pharmacy on Purdue Avenue but investigators never saw anyone who appeared to be a patient arriving to fill a prescription, according to the affidavit.
A 2014 inspection by the California Board of Pharmacy concluded that Global Compounding was a front for a drug trafficking operation, prosecutors allege. The inspection noted that many of the prescriptions filled by the pharmacy were for patients outside California.
The indictment also accuses the brothers of illegally importing anabolic steroids, including testosterone, from China.
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In 2005, Berry Kabov was stopped at the border at San Ysidro trying to bring anabolic steroids — Stenox and Primobolan — into the U.S. from Mexico, according to the search warrant affidavit. Berry Kabov was not arrested but was later assessed a penalty of $15,120, which was reduced to $2,340, the affidavit said.
The affidavit said the brothers spent extravagantly on trips by private jet from Los Angeles to Las Vegas, dinners at expensive restaurants and stays at hotels, such as the Montage in Laguna Beach.
In federal court Thursday, a judge set bail for the brothers at $50,000 for each. The barrel-chested Berry Kabov wore a pink T-shirt and appeared to struggle to walk with his muscular arms handcuffed in front of him. The judge ordered the men to stay away from Lowe, the pharmacist, who is now a witness in the case.
If convicted on the charges, the brothers would each face up to 430 years in federal prison.
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