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Nathan Jacobson

Other Fraud Exonerations
In July 2007, a federal grand jury in San Diego, California indicted 18 people, including physicians and pharmacists, on charges of participating in a fraudulent Internet prescription drug selling scheme. The indictment charged the defendants, including officials of Affpower, a Costa Rican firm, with conspiring to illegally sell more than $126 million worth of Canadian prescription drugs.
According to the indictment, Affpower sold controlled and non-controlled prescription drugs through numerous websites to customers who lacked prescriptions for the drugs from a personal physician. Affpower was accused of paying licensed doctors from various states and the Commonwealth of Puerto Rico to “haphazardly review health questionnaire answers provided by customers over the Internet and issue prescriptions solely on the basis of those answers.”
The indictment charged that Affpower doctors conducted “no physical or mental examinations before issuing prescriptions, had no contact with customers, and had no physician-patient relationship with any customer for whom the doctors prescribed drugs.  Affpower doctors usually reviewed hundreds of customer orders per day and were typically paid $3 per review.”
The indictment alleged that in some cases, Affpower doctors issued prescriptions for pharmaceuticals “even when a customer’s answers to the health questionnaire suggested that the ordered drug could pose a danger to the customer, or that the customer did not have a medical condition for which the ordered medication was an appropriate treatment.”
Further, the prosecution, in a press release, alleged that in some instances, “orders for prescription pharmaceuticals were never reviewed by a doctor at all, but were instead approved by a non-physician member of the Affpower enterprise who had allegedly stolen the identity of a licensed physician, and issued prescriptions using that physician’s name and registration.”
Among those charged was Nathan Jacobson, a Canadian entrepreneur whose credit card processing company handled the online credit transactions for Affpower. Jacobson was indicted on 313 counts, including racketeering, money laundering, mail fraud, wire fraud, distributing and dispensing of controlled substances and dispensing misbranded drugs.
Jacobson insisted that he had no knowledge of how Affpower operated its business. He retained a Canadian lawyer, Steven Skurka, who was not admitted to practice law in the U.S. to deal with an expected extradition request from U.S. prosecutors. Skurka subsequently retained criminal defense lawyers in the U.S. who represented Jacobson in U.S. District Court in southern California.
The prosecution pressured Jacobson to plead guilty, but he resisted. After exploring the possibility of having Jacobson’s company plead guilty instead of Jacobson or the possibility of Jacobson pleading guilty to a misdemeanor—neither came to pass—Jacobson changed his mind and pled guilty to one count of money laundering in May 2008.
He agreed to cooperate with the prosecution and the plea agreement was sealed from public view. Over the next four years, Jacobson provided “detailed and important information on a variety of law enforcement and intelligence topics, many of them unrelated to the investigation” of Affpower, according to a new legal team he assembled in 2013. More precise details of his cooperation have not been disclosed.
Ultimately, Jacobson’s sentencing date was set for July 20, 2012. By then Skurka no longer represented Jacobson. Jacobson wrote a letter to the U.S. District Court in San Diego saying that he could not be at the sentencing because he was scheduled to be in Myanmar. He also said that he was innocent and that he intended to seek to withdraw his guilty plea.
Jacobson failed to appear for sentencing, and a warrant was issued for his arrest. On June 26, 2013, he surrendered to Canadian authorities and was brought to San Diego where he remained in custody until September 5, 2013 when he was released on bond.
In December 2013, after Jacobson’s new legal team obtained more documents from the prosecution, a motion was filed seeking to withdraw Jacobson’s guilty plea on the grounds that Jacobson was innocent and that Skurka had provided an inadequate legal defense by persuading Jacobson to plead guilty without obtaining exculpatory documents from the prosecution.
“Other than non-controversial evidence that Mr. Jacobson…provided credit card processing services to Affpower affiliates—information that Mr. Jacobson shared with federal agents himself—there is precious little about Mr. Jacobson, and certainly nothing that persuasively establishes his guilt,” his lawyers argued.
The documents, according to the defense, showed that Jacobson did not have day-to-day involvement in the operation of the credit card processing business. Moreover, Jacobson had traveled to Costa Rica to meet with Affpower officials who assured him they were operating legally. On two occasions in 2006, Jacobson spoke with a principal official of Affpower, who was secretly cooperating with the prosecution. While the official attempted to draw Jacobson into a conversation that would suggest he knew of irregularities, the defense contended that Jacobson’s response was to run the business properly. “You’ll just have to make sure the business is cleaner than clean,” Jacobson said on a recording of the conversation.
During one call, Jacobson used the term “virtual prescription,” which the prosecution claimed was a reference to a fraudulent prescription. Jacobson’s lawyers contended that Jacobson commonly used the term to refer to “legitimate prescriptions scanned into a software system for review in different locations.”
 The motion alleged that “Skurka failed to provide effective assistance of counsel to Mr. Jacobson. Mr. Skurka neither obtained discovery nor properly evaluated Mr. Jacobson’s defenses.”
The prosecution opposed the motion and U.S. District Judge Janis Sammartino ordering a hearing on the motion.
At the hearing, Skurka, during questioning by the prosecution, denied that he had pressured Jacobson to plead guilty.
Under cross-examination by Jacobson’s lawyer, Michael Attanasio, Skurka testified that Jacobson’s statement to an Affpower official that “you had better be cleaner than clean” had to be taken in the context that it was made. In fact, Skurka testified, Jacobson made the statement to an individual that Jacobson believed was a government informant and therefore could not be viewed as evidence of innocence since Jacobson knew he was “under scrutiny” at the time.
The defense presented evidence that Jacobson had worked with the Canadian International Pharmacy Association for years to regulate distance-based delivery of pharmaceuticals. The defense also noted that even before Jacobson was indicted, he had helped the U.S. Drug Enforcement Administration and the U.S. Food and Drug Administration to crack down on illegal e-commerce in Costa Rica.
On September 15, 2014, Judge Sammartino granted the defense motion, but made no finding that Skurka had provided an inadequate legal defense to Jacobson. Sammartino issued an order stating: “Based on the evidence before this Court, including Mr. Jacobson's sworn declaration and the testimony of his former counsel Steven Skurka, and the government's non-opposition to the Motion to Withdraw, and good cause appearing, the Court finds that there are fair and just reasons for withdrawal of Mr. Jacobson's guilty plea.”
Jacobson then withdrew his guilty plea and the prosecution dismissed the charges “in the interest of justice.” As part of a non-prosecution agreement between Jacobson and the prosecution, Jacobson did not seek the return of $4.5 million he had previously forfeited as part of his guilty plea and the prosecution retained the right to reinstate the charges should Jacobson violate or legally challenge the agreement.
On May 2, 2014, Jacobson had sued his first attorney, Steven Skurka, claiming that Skurka failed to represent him adequately and improperly pressuring Jacobson into pleading guilty. On July 23, 2018, Jacobson’s claims were dismissed by the Ontario, Canada, Superior Court of Justice.

– Maurice Possley

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Posting Date: 10/13/2014
Last Updated: 3/4/2020
Most Serious Crime:Fraud
Additional Convictions:
Reported Crime Date:2006
Sentence:Not sentenced
Age at the date of reported crime:51
Contributing Factors:
Did DNA evidence contribute to the exoneration?:No