Search of Concord warehouse leads to re-arrest of dark web vendor

 

Defendant faces new federal drug charges as well as allegations he violated conditions of supervised release from his 2015 conviction

Date: May 15, 2020

Contact: newsroom@ci.irs.gov

OAKLAND – Jeremy Donagal was charged in a criminal complaint filed this morning with possession of equipment for producing counterfeit drugs as well as the manufacture and sale of counterfeit drugs in a scheme to distribute counterfeit generic alprazolam (the active ingredient in the brand-name anti-anxiety medication Xanax), announced IRS Criminal Investigation Special Agent in Charge Kareem Carter.  In a separate filing, Donagal also is alleged to have violated the conditions of his supervised release from his 2015 conviction, where he was originally charged in the 2014 indictment as "Jeremy Donagal, a/k/a/ "Xanax King", a/k/a "XK".

According to the criminal complaint, Donagal of Martinez, Calif. signed a lease in December of 2018, for a warehouse in Concord, Calif. Donagal allegedly visited the warehouse on May 14, 2020, let himself into the building, and was detained shortly after stepping outside. As explained in the motion to revoke his supervised release, inside the building, were multiple pill presses, plastic trays with punches and dies in them, thousands of pressed tablets, packaging and shipping materials, and other equipment consistent with a mail-order business. The tablets had the same markings as are used by Sandoz Inc., a company that the U.S. Food and Drug Administration has authorized to manufacture and distribute generic alprazolam. Donagal is charged with possession of equipment to produce counterfeit drugs, in violation of 21 U.S.C. § 843(a)(5), and the manufactured and sale of counterfeit drugs, in violation of 21 U.S.C. § 331(i)(3).

Donagal already was on supervised release from a previous conviction. Donagal's previous sentence included a three-year term of supervised release. Donagal was released on June 27, 2018, subject to the terms of a supervised release order that required Donagal to refrain from committing additional federal crimes and work regularly at a lawful occupation. In papers filed this morning, the government seeks to revoke Donagal's release for violating these terms of his supervised release. The motion to revoke supervised release states as follows:

Almost immediately after being released from prison to supervised release, Donagal began work setting up a new counterfeit drug operation. He set up a laboratory and pill press operation to manufacture the counterfeit pills, and he established a dark web vendor site to sell the pills nationwide. He also established vendor pages on dark web criminal marketplaces like Samsara and Empire. On May 14, 2020, agents executed search warrants at Donagal's residence and warehouse and seized pill presses, punch-dies designed to produce counterfeit drugs, and that packaging materials in the same brand name he used on the dark web marketplaces. That same day, agents arrested him.

Donagal was made his initial federal court appearance on May 15, 2020, before U.S. Magistrate Judge Donna M. Ryu. Donagal is next scheduled to appear before Magistrate Judge Alex G. Tse on May 18, 2020, at 10:30 AM for an attorney appointment hearing.

A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of possessing equipment to produce counterfeit drugs, Donagal faces a maximum statutory penalty of four years in prison and one year of supervised release. If convicted of the counterfeit drug manufacturing and sale charge, Donagal faces a maximum statutory penalty of three years in prison and one year of supervised release. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The prosecution is the result of an investigation by the IRS-CI, DEA, and HSI. The U.S. Department of the Treasury and U.S. Customs and Border Patrol is assisting with the investigation.