FedEx on Tuesday pleaded not guilty in a San Francisco court to charges that it conspired to distribute controlled substances from illegal Internet pharmacies.
The shipping company is accused of delivering controlled substances and prescription drugs from illegal Internet pharmacies despite multiple warnings from government authorities, according to a 15-count indictment filed earlier this month. Instead of closing the pharmacies' accounts, FedEx is accused of changing the shipping account classification.
FedEx allegedly earned $820 million for its role in shipping the drugs and if convicted, could be forced to pay a penalty of twice that amount.
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"FedEx pleaded innocent today to the charges that have been filed, and we will fight any additional charges if they are brought," Patrick Fitzgerald, FedEx senior vice president of marketing and communications, said in a statement first released to CNBC. "FedEx does not tolerate the use of our networks for any illegal activity, and we have a long history of partnering with law enforcement throughout the country to stop unlawful use of our networks."
Fitzgerald denied DEA, FDA or members of Congress ever asked FedEx to stop service to pharmacies the government identified as engaging in illegal activities, an accusation the indictment lays out several times. Fitzgerald also questioned how the government determined how much FedEx profited from its relationship with those pharmacies and said, "FedEx's gains from shipments by the pharmacies listed in the indictment were far below $820 million."
FedEx has been defiant since the indictment was filed and has brought on a heavy-hitting defense team; lead attorneys Cristina Arguedas and Allen Ruby are perhaps best known for defending baseball slugger Barry Bonds in an investigation into his alleged use of steroids. (He was found guilty of obstruction and sentenced to home confinement, but that sentence is on hold pending appeal.)
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Last year, FedEx rival UPS settled similar claims regarding prescription drugs and illegal Internet pharmacies. In its agreement with the Department of Justice, UPS paid $40 million and agreed to create a compliance program to identify illegal pharmacies and close their shipping accounts.
In an interview Tuesday on CNBC, UPS Chief Financial Officer Kurt Kuehn said the company stands by its decisions to settle, as opposed to fighting the charges.
"Our responsibility isn't to inspect packages, but if there is a suspicion that comes up that there may be an illegal activity happening, we need to communicate that and be somewhat diligent in making sure that our network is being used for legal purposes," Kuehn said.
FedEx is due back in court Sept. 24 in San Francisco for a status conference. In the meantime, prosecutors said they intend to present a superseding indictment to the grand jury no later than Aug. 28.
—By CNBC's Betsy Cline