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Google Busted for Advertising Illegal Pharmacies

Unnamed sources told the Wall Street Journal that Google is close to settling a U.S. criminal investigation into allegations that the search engine giant raked in hundreds of millions of dollars by displaying ads from online pharmacies selling counterfeit drugs and those not requiring a prescription. The probe is currently trying to determine if Google knowingly accepted the ads and purposely turned a blind eye.

The news arrives after Google disclosed in a cryptic regulatory filing earlier this week that it had set aside $500 million to potentially resolve a case with the Justice Department. Google didn't go into specific details about the investigation in its filing, only stating that the probe involved "the use of Google advertising by certain advertisers."

According to insiders close to the matter, the probe has been conducted by the U.S. Attorney's Office in Rhode Island and the Food and Drug Administration, among other agencies. One major avenue the investigation has taken is into the extent to which Google ignored the alleged illicit activities of various advertisers and how much the executives knew about the situation.

After the FDA began its official investigation back in February 2010, Google decided refuse ads by online pharmacies that weren't registered by the National Association of Boards of Pharmacy and the Canadian International Pharmacy Association. Then in September 2010, Google filed a lawsuit in San Jose, Calif. seeking to block illegitimate pharmacies from advertising on its serch engine, and to recover any damages caused by these illegal operations.

"Rogue pharmacies are bad for our users, for legitimate online pharmacies and for the entire e-commerce industry—so we are going to keep investing time and money to stop these kinds of harmful practices," said Google lawyer Michael Zwibelman last September.

Prior to February 2010, Google required that all online pharmacies be verified by PharmacyChecker.com. Unfortunately, numerous rogue pharmacies advertised on Google but never registered with PharmacyChecker despite Google's policy, and were discovered by the Food and Drug Administration's office of criminal investigation. The Rhode Island US attorney subpoenaed Gabriel Levitt, vice president of Pharmacychecker, in July 2009 to find out what was going on.

“The U.S. attorney asked me why Google was allowing such rogue sites to advertise,” Levitt said. “I responded that I did not know. I still don’t know. We were never the gatekeeper for Google.”

The investigation is still ongoing, but as sources previously stated, Google is close to a deal. According to the Wall Street Journal, Google co-founder, high-ranking executive and board member Segey Brin ignored questions about the current investigation Wednesday during a conference, acknowledging the current company leader Larry Page.

"Luckily, since we changed roles a few months ago, I don't have to deal with filings, and the DOJ, the SEC or other acronyms," Brin said.