A state appeals court has tossed out eight of 10 convictions for a Suffolk County pharmacist sentenced to prison in 2016 for taking part in a scheme to sell black-market prescription drugs used for treating HIV to patients.   

A four-judge panel from the Brooklyn-based Appellate Division, Second Department on Wednesday said that the state Attorney General's Office failed to present sufficient evidence to convict pharmacist Ira Gross with first-degree grand larceny, first-degree criminal diversion of prescription medication, three counts of first-degree money laundering and related charges.

Gross was sentenced to six years in prison for his role in the operation, in which Gross worked as an intermediary between Glenn Schabel, the supervising pharmacist at the now-rebranded MOMS Pharmacy in Melville, and Stephen Costa, a distributor that was moving HIV anti-retroviral medication purchased through the black market and treated to remove labeling from medication bottles.

Writing for the appeals court, Justice Sandra Sgroi said Schabel, a high-ranking employee at the pharmacy, knew it was illegal to sell the diverted medications—thus, by imputation, so did the pharmacy.

Therefore, Sgroi said, prosecutors failed to prove a key element for grand larceny, a class B felony and the top count in the indictment against Gross: that he used false representation to bilk the pharmacy out of money.

Justices William Mastro, Cheryl Chambers and Joseph Maltese joined Sgroi on the unanimous decision.

Gross' lawyer, John Martin of Garfunkel Wild, said his client was a middleman in the scheme and that prosecutors presented “zero evidence” that any patients were harmed by drugs sold as part of the scheme.   

“I think the AG's office, like the jury, decided they didn't like my client and just decided to hurt him as much as they could and they weren't careful with the law,” Martin said.  

The Attorney General's Office did not respond to requests for comment. Assistant Attorneys General Nikki Kowalski and James Gibbons appeared for the Attorney General's Office.

As for Gross' conviction on a charge of criminal diversion of prescription meds, an offense created under a statute that has been applied very few times since it was enacted in 1995, Sgroi said the offense doesn't apply to Gross' conduct because the law applies to patients selling their medications on the street and their customers.

The panel preserved Gross' convictions of second-degree money laundering and first-degree commercial bribery and vacated the sentences associated with the dismissed charges. Martin said though that, given the dismissed charges, his client should be eligible for release.

The cocktail of drugs used to treat HIV and AIDS patients can cost between $3,000 and $4,000, according to the Second Department's ruling, though patients on Medicaid pay much less if anything at all for the meds and can sell them on the street for below market value.

An expert witness for the prosecution testified that meds that leave the legitimate distribution system are deemed adulterated and should not be resold, as there is no way to determine if the diverted meds are safe or effective.

The diverted meds that passed through Costa's distribution centers were resold at MOMS Pharmacy locations; about $154 million of the costs for the resold meds were billed to New York's Medicaid program, according to a news release from the Attorney General's Office.

While the operation was running from 2008 to 2012, a total of $274 million worth of diverted HIV drugs were sold, of which Gross made a $25.2 million cut, according to a news release from the Attorney General's Office.

After word of the scheme reached the Attorney General's Office, the office's Medicaid Fraud Control unit launched an investigation and the office obtained wiretaps for Gross and Costa's cellphones and listened in to their calls with each other and calls between Gross and Schabel.

Schabel pleaded guilty in 2016 to criminal prescription medication diversion and commercial bribery and was also sentenced to prison. Costa pleaded guilty to providing Gross with technical assistance.

Gross is appealing the civil forfeiture action in the case, for which a Second Department panel heard oral arguments on Thursday.