New York Subpoenas Banks and Financial Advisers for Sackler Records

The New York state attorney general has begun issuing subpoenas to 33 financial institutions and investment advisers with ties to the Sackler family, part of an aggressive effort to track billions of dollars that prosecutors claim the family siphoned out of Purdue Pharma to hide profits gained from the company’s opioid painkillers.

The recipients of the subpoenas ranged from major Wall Street firms to obscure offshore holding companies as well as two family investment offices and four individual advisers, according to court documents. The action is part of a broad attempt to hold individual Sacklers, who are owners of Purdue Pharma, accountable in some measure for unleashing the opioid crisis that has killed more than 200,000 Americans over the past two decades.

Purdue Pharma is widely seen as playing a central role in creating the opioid epidemic by misleading doctors about its drug OxyContin’s addictive properties and playing down evidence that the drug was being abused.

New York State and others, most recently Arizona, have charged that as reports grew about Purdue’s marketing of OxyContin, the Sackler family began transferring money out of Purdue into a far-flung network of surrogate companies and foundations, installing successive generations of relatives as overseers, to keep the money away from the scrutiny of potential litigants.

Asked to comment on the subpoenas, a lawyer for several members of the Sackler family emailed a statement: “The New York Attorney General settled with Purdue for $ 75,000 in 2015 after conducting an investigation into alleged deceptive advertising and business practices. The Attorney General’s current claims are without merit and the subpoenas are improper.”

The subpoenas were issued in connection with a lawsuit filed by the New York attorney general this year against members of the Sackler family. It claims that family members had shifted billions of dollars from the business to themselves each year beginning in 2007, the year the company and three top executives pleaded guilty to deceptive marketing in an agreement with federal prosecutors. The company paid a $ 600 million fine.

“The opioid epidemic has ravaged American communities for over a decade, while a single family has made billions profiting from death and destruction,” said Letitia James, the New York attorney general. “From the day we filed this complaint, we said the Sackler family would be held responsible for their despicable actions hooking our nation on OxyContin. We won’t let up until we have delivered justice.”

The New York lawsuit is seeking to claw back years of transferred funds, and to restrain the Sacklers from disposing of property.

The raft of related subpoenas issued over the past few days is a major step toward untangling the vast financial web of the Sacklers’ business empire — the company’s global ownership structure includes dozens of holding companies and other corporate entities — and to follow the money trail to discover how funds were moved, under what circumstances and where they are now.

The legal theory behind the subpoenas is called “fraudulent conveyance,” an action typically pursued by creditors during the course of a bankruptcy proceeding. The claim usually seeks to determine whether a debtor has hidden money to elude potential creditors.

The attorney general’s move is somewhat novel: She argues that the way the Sacklers’ assets and profits were funneled to various institutions is tantamount to fraudulent conveyance, and central to the state’s liability claims against them. In moving their money around, the state’s lawsuit says, the Sacklers demonstrated that they were well aware of the mounting problems related to the manufacturing and marketing of opioids, and that they knew they could be vulnerable to litigation.

Last month, the State of Arizona, which is also suing members of the Sackler family, took the unusual step of filing a lawsuit in the United States Supreme Court asking it to order the Sacklers to return what it said were billions of dollars channeled from the company while it was facing potentially massive liabilities. That lawsuit claimed Purdue transferred more than $ 4 billion to the Sacklers from 2008 through 2016.

None of the subpoenas issued in recent days target the Sacklers. Rather, they were issued to entities that did business with the members of the family or are part of the global ownership structure of Purdue. The subpoenas do not suggest that the recipients are themselves the subject of litigation by the state — only that New York is seeking depositions and mountains of documents, in some cases dating back to 1996, when OxyContin was introduced, to learn more about the Sackler enterprises.

Among them are 10 large investment banks, including Citibank, Goldman Sachs, Morgan Stanley, HSBC Bank USA, Charles Schwab, Wells Fargo, UBS, Bank of America, and JPMorgan Chase and HSBC Securities USA.

The subpoenas cast a wide net, demanding the banks produce documents about all accounts, investments, wire and electronic money transfers, loan applications and mortgages, as well as bank statements, canceled checks and more.

The subjects of the subpoenas also include 13 corporate entities that are part of the global ownership structure of Purdue, including Rosebay Medical Company, Linarite Holdings, Perthlite Holdings, Data, Moonstone Holdings and Roselite Holdings.

And the state is in the process of issuing subpoenas to four offshore entities that are part of Purdue, including Banela Corporation, which is incorporated in the British Virgin Islands, and Millborne Trust Company Limited, incorporated in Jersey, a British island in the English Channel. Court documents say the offshore companies “appear to have served as conduits for monies from Purdue” and various holding companies, as well as from the Sacklers.

The subpoenas demanded all documents related to the entities’ formation, as well as information about all payments and monetary distributions, financial transfers to and from Purdue, and records of all communications with Purdue and any of the Sacklers.

The office also is in the process of issuing a subpoena to Jonathan G. White of Jersey, whom it says is “believed to be director of a number of Sackler-controlled entities” that have also been conduits for the transfer of funds. Mr. White could not be immediately reached for comment.

In addition, the state is issuing subpoenas to two family investment offices, Stillwater Holdings and Summer Road, demanding information about the amounts of money under their management for each investor, and information from 2007 to the present about where the money was invested, and any transfers of money or loans made.

Subpoenas were also issued to Leslie Schreyer and Jeffrey Robins, who are with the law firm of Norton Rose Fulbright. Mr. Robins, a partner at the firm, whose expertise is described on its website as tax and estate planning for “high net worth individuals and families,” was named in court papers as the manager of three holding companies that are part of the global Purdue ownership structure. Mr. Schreyer, described by the firm as an expert in “tax planning and tax controversies,” is named in the subpoena as manager of four holding companies.

Neither Mr. Schreyer nor Mr. Robins returned calls requesting comment.

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