How the Sacklers Shifted $10.8 Billion of Their Opioid Fortune

By Emma Vickers
Graphics by Christopher Cannon and Mark Glassman

August 26, 2020, 5:00 AM EDT

As the U.S. bumbles its way through the coronavirus pandemic, it can be easy to overlook the opioid epidemic that’s shattered so many lives. But a trove of documents that Bloomberg Businessweek has spent months analyzing helps explain how the company at the center of the crisis moved money around in the years prior to declaring bankruptcy.

Purdue Pharma LP faced its first court challenge in 2007, pleading guilty to misleading the public about the addictive potential of its flagship painkiller, OxyContin. By 2019 more than 130 people were dying daily from opioid overdoses in the U.S., and Purdue faced thousands of lawsuits for its role in the epidemic. The company, owned by the Sackler family, declared bankruptcy in September of that year to short-circuit the lawsuits.

But in the years prior to the bankruptcy, Purdue and its subsidiaries moved billions to companies ultimately registered in Luxembourg, the British Virgin Islands, and Delaware. The trail that traces those billions is labyrinthine, but here’s what we know about their maneuvering based on hundreds of pages of publicly available information. (In a statement, Purdue said it had “provided the company’s stakeholders and the American public with an extraordinary amount of detailed financial information.” A spokesperson for the family said in a statement, “All of the Sackler family members, including those who served on Purdue’s board, have always conducted themselves properly.”)

From 2008 through 2017, $10.8 billion flowed out of Purdue in hundreds of transactions through numerous subsidiaries. (A small percentage of this sum was reinvested in Purdue or lent to and fully repaid by an affiliated company.) After tax bills were settled, the bulk of the cash landed in two Delaware companies, Rosebay Medical Co. and Beacon Co.

Despite the scandal around the Sacklers’ role in marketing opioids, the family has continued to earn returns through investments across the U.S. economy. Kokino LLC, which manages the wealth of Jonathan’s family, made up about 20% of investor funds managed by hedge fund Sunriver and holds smaller stakes in tech and oil companies. Richard’s family office, Summer Road, is calculated to have made $60 million last year through its client Cap 1 LLC from the sale of a stake in ski company Peak Resorts.

The Sackler family and Purdue have proposed a settlement worth more than $10 billion with the 48 states suing for damages; they’re about split between rejecting and accepting it. Under the plan, the family would hand over the company to a trust controlled by the states and sell Mundipharma; the Sacklers themselves would foot $3 billion, though they continue to deny responsibility for the opioid crisis. James said New York would oppose “any deal that cheats Americans out of billions of dollars” and “allows the Sacklers to evade responsibility.” (“A critical mass of plaintiffs representing more than half of the U.S. population support the settlement framework,” Purdue said.) The bankruptcy judge in the case has paused other lawsuits against Purdue and the Sacklers until October while negotiations continue.

—Corrects information about the family’s affiliations with Rosebay and Beacon.

With assistance from Anders Melin and Jeremy Hill
Editors: Bret Begun and Yue Qiu

Photos: Taco van der Eb/Hollandse Hoogte/Redux. Alan Davidson/Shutterstock. David M. Benett/Getty Images (2). Sylvain Gaboury/Patrick McMullan/Getty Images. Purdue Pharma. Bill Cunningham/The New York Times/Redux. Ronda Churchill/Bloomberg

Methodology: The $10.8 billion figure is drawn from an audit report prepared by AlixPartners LLP and Purdue. According to the report, $247 million went to loans that were repaid in full.

The information on cash transfers—from Purdue into Rosebay, Beacon, Perthlite, Linarite, and Banela—and on tax payments is drawn from the AlixPartners and Purdue report (pages 27, 66).

Details on the ownership of Rosebay and Beacon, as described by the attorneys general of Arizona and New York, come from a July 31, 2019, filing, filing to the Arizona Supreme Court in State of Arizona v. Purdue and affiliates (page 5); and from a Sept. 13, 2019, filing to the Supreme Court of the State of New York, Suffolk County, in The People of the State of New York v. Purdue Pharma (page 6).

Particulars on the transfers from Beacon to Mortimer D.A., and the purchase of New York real estate as described by the New York state attorney general, can be found on page 7 of the Sept. 13 filing, in New York property records, and in Suffolk County property records.

The figures for the Luxembourg and BVI companies are derived from the AlixPartners and Purdue report (page 66), along with additional Bloomberg News reporting.

Specifics on the ownership of Banela, Perthlite, and Linarite as described by the New York state attorney general is on page 4 of the Sept. 13 filing.

Information on Kokino LLC’s holdings come from a November 2019 filing to the U.S. Securities and Exchange Commission. The Sunriver Management LLC figure is based on Bloomberg News reporting that 20% of assets managed by Sunriver are held by Kokino.

Details on Summer Road LLC’s holdings can be found in an August 2020 filing to the SEC.

Particulars on Stillwater Holdings LLC’s holdings are in an April 2020 filing to the SEC by EMagin Corp. The stake is valued as of Aug. 19.

How the Sacklers Shifted $10.8 Billion of Their Opioid Fortune

The Family Business

Moving Billions

The Family Offices