Copies of the emails, along with memos and messages from a family WhatsApp group chat, were unsealed last week in U.S. Bankruptcy Court for the Southern District of New York, where the company and its affiliates filed for relief in September 2019. The documents offer the most complete picture yet of the internal deliberations of the wealthy family that led one of the largest manufacturers of prescription painkillers during the height of the opioid crisis.
Following the Justice Department settlement, the Sacklers met with a bankruptcy attorney, assessed selling the company to a larger firm and were advised to take “defensive measures,” including through “overseas assets with limited transparency and jurisdictional shielding from U.S. judgments,” according to the documents.
“Fundamentally, we don’t want to stay in this business anymore (given the horrible risks, outlooks, difficulties, etc) and I think the majority of your family feels the same way,” Mortimer wrote to Richard eight months after David’s message. “Even though our prospects have improved dramatically I feel it offers us a unique opportunity to sell at a very high price and once and for all eliminate the great risks we have and continue to take and secure our families’ current and future financial security.”
While this was happening, Purdue’s staff continued to market and sell its blockbuster opioid OxyContin.
The family ultimately decided not to sell and was paid about $10 billion in profits through 2017, according to creditors and documents unsealed Friday after attorneys for the Reporters Committee for Freedom of the Press intervened on behalf of news organizations, arguing for greater transparency given the substantial public interest in the case.
More than 2,600 cities, towns and other jurisdictions have filed a massive federal lawsuit against the drug company and others, but litigation against Purdue and the Sacklers is on hold pending the bankruptcy case and a proposed global settlement by Purdue worth an estimated $10 billion. Purdue also agreed to an $8.3 billion settlement that would establish the private company as a public trust corporation, federal officials announced in October.
But creditors argue the Sacklers bear financial responsibility, alleging the family withdrew billions out of Purdue “in a deliberate attempt to hinder or delay opioid creditors” as they became increasingly concerned about the threat of opioid-related litigation to the family’s massive wealth.
“[W]e’re living in America. This is the land of the free and the home of the blameless,” David Sackler wrote in May 2007. “We will be sued. Read the op-ed stuff in these local papers and ask yourself how long it will take these lawyers to figure out that we might settle with them if they can freeze our assets and threaten us.”
The emails filed by the creditors, according to Jonathan Lipson, a professor at Temple University’s Beasley School of Law, feature “classic language that signals an intent to hinder and delay creditors,” otherwise called a fraudulent transfer.
The Sacklers’ attorneys say that the comments in the emails were “cherry-picked” and that there was no evidence that the company and family would face an onslaught of opioid-related litigation until 2017. Instead, they say the family was concerned about the expiring patent for OxyContin. The attorneys argue that distributions to the family complied with a corporate integrity agreement and that the company remained solvent. The family says about half of the distributions were paid as taxes.
“We supported the release of documents by the Court and reaffirm that members of the Sackler family who served on Purdue’s board of directors acted ethically and lawfully in every regard,” representatives for the two branches of the family named in the litigation told The Washington Post in a statement.
“The fraudulent conveyance arguments are without merit, and the documents now being released demonstrate that,” family attorney Daniel S. Connolly said in a statement.
While many of the unsealed documents have been reported on or released in other cases, some have been withheld from public scrutiny, as the Sacklers argued that their release infringed on attorney-client privilege.
“These filings finally display just some of the measures taken by and at the direction of individual members of the Sackler family to illegally shield their finances and protect billions in profit,” New York Attorney General Letitia James (D) wrote in a statement Friday. “The vast financial web this family built was meant to pull wool over our eyes and conceal their assets from both creditors and victims. As we have argued since we first filed our lawsuit nearly two years ago, we need full transparency into the Sacklers’ total assets, as well as justice for opioid victims and our communities.”
In one of the newly released documents, Peter Boer, an engineer and businessman who was offering informal advice to the family, wrote to Jonathan Sackler, referencing a chemical company he worked for that dealt with asbestos liability. He said possible lawsuits that a company may face would affect the value of it for a sale and commented that litigants would be less likely to pursue “overseas assets,” adding, “I presume the family has taken most of the appropriate defensive measures.” Boer joined the company’s board shortly after.
The Sacklers’ attorneys deny the family took such measures suggested by Boer, who they said was not a part of the company at the time the memo was written.
The case is so “textbook,” according to Rep. Katie Porter (D-Calif.), that on Thursday during House testimony by David and Kathe Sackler, former board members, Porter held up a bankruptcy law textbook she wrote and cited the federal law defining fraudulent transfer.
“Why should the company not transfer back the $10.4 billion to be used to pay the creditors in this case, including the victims of opioid abuse?” Porter asked.
During the testimony, Porter and other members of the House Oversight Committee grilled the Sacklers about their payments from the company, asking why they should not be held financially responsible to creditors and those suing Purdue. The Sacklers, in their testimony, apologized to the loved ones of more than 450,000 people who died of opioid overdoses in the past two decades but denied wrongdoing.
“We are truly sorry to everyone who’s lost a family member or suffered from the scourge of addiction,” David Sackler said.
It was the first time members of the Sackler family had faced public questioning about the opioid crisis in decades, according to the committee.
Meanwhile, internal communications unsealed in the bankruptcy case reveal the emotional conversations they had during the crisis.
In a WhatsApp family group chat, members discussed media reports about their company and the surging number of overdose deaths, the public blowback they faced and what their response should be. At one point, they weighed starting a foundation or research group focused on opioid addiction.
In October 2017, Ilene Sackler Lefcourt, a former director, wrote to the family that the company was considering stopping its representatives from selling its blockbuster OxyContin.
“The financial result is being calculated,” she wrote. “I am in favor of moving this ahead asap. And think the bigger the estimated cost to the company, the better.”
Minutes later, Mortimer Sackler responded: “This is not the forum to discuss that.”
Correction: A previous version of this story incorrectly said that the Sackler family was paid $10 billion in profits through 2019. In fact, cash distributions stopped in 2017. The story also described Peter Boer as a financial advisor to the family. Boer is an engineer and businessman who offered informal advice to the family. The story has been corrected.