FDA/OCI
cases 1st Quarter, 2003:
May 2003
Addressees,
The following information relates to the first installment for 2003.
These OCI cases have received convictions or related judicial action.
The information is considered unrestricted.
Chicago Field Office
Convictions/Sentencing
This case was initiated based on information received from a former
employee for OLD FASHIONED FOODS (OFF). The initial information provided
was that adulterated and misbranded cheese products were being manufactured
by OFF. Specifically, OFF was manufacturing cold-pack cheese food and
substituting soybean oil for cream. Soybean oil costs approximately
half the price of cream or butter. Neither the addition of the soybean
oil, nor the deletion of a portion of the cream was listed on the ingredient
statements of the cold-pack cheese food products. In addition, it was
also determined that a systematic short weighting of various cheese
products produced at OFF was occurring under the direction of Gary YOUSO,
owner of OFF.
A series of retail purchases of cold-pack cheese food were conducted
by the Office of Criminal Investigations (OCI) and the FDA Minneapolis
District Office. The cold-pack cheese food was submitted to the FDA
Midwest Laboratory for Microbiological Investigations, to determine
if soybean oil could be detected in the cold-pack cheese food. FDA chemists
advised that while there were tests to determine the percentage of fat
in a product, there were no methodologies to determine the specific
identity of the fat in the cold-pack cheese food. In this case, the
chemists were asked to distinguish the differences in animal fat, such
as butter or cream, typically used in the production of cold-pack cheese
food, from fat derived from a vegetable source. If this could be established,
then the allegations of misbranding and adulteration of the cold-pack
cheese food could be independently established. FDA chemists were able
to develop a methodology to determine if a quantity of ìB-Sitosterolî
was present in a sample. B-Sitosterol was a chemical marker, unique
to vegetable fat, which if present in a sample would indicate that vegetable
oil was an ingredient in the sample. Therefore, if any sample contained
B-Sitosterol then vegetable oil was an ingredient within the sample.
This would render the cold-pack cheese food misbranded and adulterated.
Sixteen samples of cold-pack cheese food, produced by OFF, were determined
by the Midwest Laboratory for Microbiological Investigations to contain
B-Sitosterol.
On May 30, 1996, a search warrant was served on the business of OFF.
Employee interviews and production records obtained during the search
confirmed the allegations of adulterated and misbranded products. An
analysis of OFF production records from 1993 through May 21, 1996, determined
that OFF produced 16,971 batches of cold-pack cheese food, of which
5,237 batches (30.86%) were adulterated with soybean oil. This produced
a net savings to OFF of approximately $53,315. An analysis of OFF production
records from 1992 through 1996, determined that OFF produced 21,776
batches of cold-pack cheese food, of which16,663 (76.52%) contained
less than the required amount of 51% cheese. This produced a net savings
to OFF of approximately $158,657.
On November 27, 2002, YOUSO and OLD FASHIONED FOODS, Inc. were convicted
of Title 21, U. S. C., ß 331(a) and 333(a)(1) - Causing Adulterated
Food to be Introduced and Delivered for Introduction into Interstate
Commerce; Title 21, U. S. C., ß 331(a), 331(k), 333(a)(2) and Title
18, U.S.C. ß 2 - Scheme to Defraud the Food and Drug Administration
by Causing Adulterated Food to be Introduced and Delivered for Introduction
into Interstate Commerce, and Causing Misbranded Food to be Introduced
and Delivered into Interstate Commerce with the Intent to Defraud and
Mislead. YOUSA was ordered to pay a fine of $175,000 for the felony
violations.
This concludes an investigation of close cooperation between the OCI,
Chicago Field Office and the FDA, Minneapolis District Office.
Chicago Field Office
Convictions/Sentencing
On March 20, 2002, the FDA Office of Criminal Investigations (OCI),
Minneapolis Domicile was advised by the United States Customs Service,
Duluth, MN, that on March 14, 2002, Patrick SCHULE, Milaca, MN, entered
into the United States, through the International Falls, MN, Port of
Entry. Upon entry, SCHULE declared that he was in possession of 50 acetaminophen
tablets. A secondary search by Customs revealed that SCHULE was actually
in possession of 2,650 tablets rather than the 50 he had declared. The
tablets were labeled ìacetaminophen with codeine.î When asked about
these tablets, SCHULE was unable to provide a valid prescription and
claimed that the tablets were for his own ìpersonal use.î These tablets
were then seized by Customs, and SCHULE was allowed entry into the United
States.
Forensic analysis conducted on the tablets revealed that they did contain
codeine, a Schedule III substance in MN.
On July 18, 2002, a criminal complaint was filed in Koochiching County
District Court citing that on or about March 14, 2002, SCHULE possessed
more than 10 grams of a narcotic drug (1,123grams of tablets containing
acetaminophen, caffeine, and codeine), a felony controlled substance
offense.
On December 9, 2002, SCHULE appeared in Koochiching County District
Court and was convicted of a 3rd degree controlled substance crime.
On February 24, 2003, SCHULE was sentenced in Koochiching County, MN,
to a ìStay of Impositionî for five (5) years and forty-five (45) days
incarceration as a condition of the stayed sentence.
Chicago Field Office
Convictions/Sentencing
This investigation was initiated in June 2001 based on information provided
by the Standardbred Investigative Services, Incorporated (SIS), of Elkton,
Maryland. SIS requested assistance with an investigation regarding the
ANCHOR SERUM COMPANY of National Stockyards, IL, which was believed
to be the source of unapproved and misbranded veterinary prescription
drugs.
On March 25, 2002, the Office of Criminal Investigation (OCI), Chicago
Field Office placed an order for veterinary (injectable) prescription
drugs from William TIPPETT, Owner of the ANCHOR SERUM COMPANY. This
was the second undercover buy from TIPPETT. At no time did TIPPETT request
or receive a veterinary prescription or state veterinarian identification
number. The veterinary (injectable) prescription drugs were mailed to
an undercover post office box in Florence, KY.
On April 08, 2002, the veterinary (injectable) prescription drugs arrived
at the post office box. Based on the undercover purchases a search warrant
was executed at the premises of the ANCHOR SERUM COMPANY, 59 Front Street,
National Stockyards, IL.
Subsequent to the execution of the search warrant, TIPPETT stated that
for the last several years he bought and sold various approved and unapproved
veterinary prescription drugs. TIPPETT stated that he routinely purchased
approximately $2,500 to $4,000 worth of various veterinary drugs from
individuals and companies each month.
On December 18, 2002, TIPPETT was convicted of Title 21, U. S. C. ß
331(k) - Alteration, Mutilation, Destruction, Obliteration, or Removal
of the Whole or any Part of the Labeling; Title 21, U.S.C ß 333(a) (2)-Misbranding;
and Title 21, U.S.C. ß 353(f) (1) (c) - Dispensing a Drug Contrary to
Provisions.
On March 14, 2003, TIPPETT was sentenced to one (1) year and one (1)
day of supervised probation, and a $3,500 fine.
Chicago Field Office
Convictions/Sentencing
The case involved an allegation that Debra DYER-PAGEL, a Registered
Nurse (RN) in the Emergency Room (ER), Northfield Hospital, Northfield,
MN, tampered with Morphine, Meperidine (Demerol), Mepergan, and Imitrex.
Hospital officials initially were alerted to the tampered containers
when patients received pain medication, such as Morphine, but did not
receive pain relief. Hospital officials subsequently scrutinized the
containers. The containers of Morphine, Meperidine, and Imitrex appeared
to have had liquid contents in them. However, the lids appeared to have
been glued on. The plastic sheath container for the Mepergan vials appeared
to have been torn, and liquid contents were in the individual Mepergan
vials. DYER-PAGEL generally worked during the night shift and often
worked alone.
DYER-PAGEL was filmed on video surveillance tape in and around the narcotic
storage area during a prior theft at the hospital which occurred sometime
in March, 2000. The theft involved Nubaine, Imitrex, and Ibuprofen.
The film was inconclusive as to DYER-PAGELís activities. However, it
appeared that DYER-PAGEL placed an unidentified item in her pocket.
No patients were in the ER during this time frame.
DYER-PAGEL subsequently was filmed on video surveillance tape apparently
tampering with medications. DYER-PAGEL obtained attorney representation
and refused to cooperate with this investigation. Northfield Hospital
officials subsequently advised that DYER-PAGEL was suspended from her
employment at the hospital, and no other indications of tampering were
identified after her suspension.
The containers that were allegedly tampered with were analyzed by the
FDA, Forensic Chemistry Center (FCC). The FCC concluded that the containers
had evidence of glue, puncture indentations, and/or contained other
substances (e.g., saline solution) which should not have been present.
Representatives from the United States Attorneyís Office and the FDA,
Office of Criminal Investigations (OCI), met with DYER-PAGEL and her
attorney. DYER-PAGEL and her Attorney viewed a videotape which recorded
DYER-PAGEL tampering with medications.
On December 17, 2002, DYER-PAGEL was convicted of one (1) count of Title
18, U.S.C. ß1347- Health Care Fraud. On March 5, 2003, DYER-PAGEL appeared
before Judge Donovan Frank, District of Minnesota (St. Paul, MN), and
was sentenced to three (3) years probation.
Kansas City Field Office
Convictions/Sentencing
This case originated upon notification from the Little Rock Police Department
regarding a package that was intercepted by the Australian Federal Police.
The Customs declaration on the package stated the contents were ìcomputer
cleaning supplies.î However, the package contained all the necessary
precursor ingredients to manufacture Gamma Hydroxybutyrate (GHB). The
package noted a return address located in Little Rock, Arkansas.
Subsequent inquiry by the FDA, Office of Criminal Investigations (OCI),
revealed that GHB kits were being marketed and sold as ìexothermic reactionî
kits via the Internet by a website ghbkit.com. The website was operated
by Michael STARKS. STARKS was doing business as Chem Labs Inc., and
was advertising and selling GHB kits via the Internet. Despite the ingestion
disclaimer, STARKS was marketing and selling ìdo it yourselfî GHB kits
and providing the necessary ingredients to manufacturer GHB under the
guise of a science project. STARKS attempted to avoid state and federal
laws by marketing and selling not the finished drug, but a kit that
contained the components of GHB, Gamma Butyrolactone (GBL) and sodium
hydroxide. GBL is an industrial solvent used for stripping wood floors
and cleaning plastic resin molds. Sodium hydroxide is a highly caustic
chemical that is an active ingredient in the household cleaning product
DranoÆ. The website resulted in thousands of kits being distributed
throughout the world.
On February 3, 1999, a search warrant was conducted at Chem Labs in
Little Rock, Arkansas. Subsequent to the search, the website was shut
down and the distribution of the GHB kits was terminated. The investigation
revealed that the illegal business operated by STARKS generated over
$700,000 in revenue and also violated the United States Department of
Transportation (DOT) regulations by not properly declaring hazardous
materials in limited quantities. STARKS still faces potential civil
sanctions by the DOT.
On July 22, 2002, STARKS was convicted of Title 18, U.S.C. ß 371- Conspiracy;
and Title 21 U.S.C. ß331 (a) and 333 ß (a)(2) - Introduction into Interstate
Commerce Misbranded Drugs with the Intent to Defraud and Mislead.
On December 16, 2002, STARKS appeared before Judge Thomas Eisele in
the Eastern District of Arkansas for sentencing. STARKS was sentenced
to 18 months incarceration, and fined $30,000. In addition, STARKS forfeited
$300,000 to the United States Marshal's Service in the Eastern District
of Arkansas.
Kansas City Field Office
Convictions/Sentencing
This investigation was predicated upon receipt of information derived
from another case in the Kansas City area, RESEARCH MEDICAL CENTER TOWER
PHARMACY. The defendant in that case, Robert COURTNEY, identified two
individuals from whom he had purchased diverted pharmaceuticals. The
two individuals, Aram C. PARAGHAMIAN and Walter J. ACCURSO, retired
pharmaceutical representatives, worked as cooperating witnesses in this
case. COURTNEY had purchased the pharmaceuticals from these individuals
for approximately ten years. In turn, PARAGHAMIAN and ACCURSO provided
information to the FDA, Office of Criminal Investigations (OCI), which
lead to the identification of several pharmacists, and a doctor in the
Kansas City area who were involved in the sale and/or purchase of drug
samples and stolen drugs. This case was worked jointly with the Federal
Bureau of Investigation.
Investigation revealed that Steuart W. SMITH, a pharmacy buyer for the
in-house pharmacy at the University of Colorado Hospital in Denver,
CO, was the source of the stolen drugs that COURTNEY had purchased from
PARAGHAMIAN and ACCURSO. As a result of this information, PARAGHAMIAN
and ACCURSO made undercover telephone calls and meets to purchase stolen
drugs from SMITH. PARAGHAMIAN and ACCURSO then made subsequent sales
to two Kansas City pharmacists, Clarence H. WINER and Gary S. RAVIS.
Both WINER and RAVIS had previously done business with PARAGHAMIAN and
ACCURSO. The investigation also determined that Dr. Stephen M. CICERO
sold drug samples worth approximately $30,000 to RAVIS during the time
period 1996 to 2001.
On September 25, 2001, ìstolenî drugs that were previously ordered by
RAVIS and WINER were delivered to RAVIS and WINER. RAVIS and WINER were
subsequently confronted with the sales of the stolen drugs. WINER cooperated
fully and gave a statement of his involvement in the purchase of stolen
drugs. RAVIS denied his involvement and requested attorney representation.
Both were served with document subpoenas for pharmacy records.
In addition, ACCURSO ordered two undercover chemotherapy drugs from
SMITH. An undercover meet was scheduled with SMITH to pay him $6000
for the stolen drugs. After the meet, SMITH was confronted and voluntarily
surrendered the money and agreed to be interviewed. SMITH confessed
to stealing pharmaceuticals from the hospital for approximately the
past eight years. SMITH believed that he had profited approximately
$50,000 from these illegal sales.
On December 17, 2001, RAVIS was convicted of Title 18, U.S.C. ß 2315-
Receipt of Stolen Goods. RAVIS was later sentenced to six (6) months
of monitored home detention, five (5) years probation, and fined $250,000.
On January 10, 2002, ACCURSO entered a Consent Decree and Permanent
Injunction in which $8,650 in proceeds from illegal transactions of
stolen drugs that traveled in interstate commerce were surrendered for
forfeiture, and ACCURSO agreed to pay $25,000 as an equitable disgorgement
remedy under the Food, Drug, and Cosmetic Act for his conduct.
On March 21, 2002, PARAGHAMIAN pled guilty to one (1) count of Title
18, U.S.C. ß 2314- Interstate Transportation of Stolen Property. PARAGHAMIAN
was later sentenced to six (6) months of home detention, three (3) years
probation, and fined $60,000.
On April 4, 2002, SMITH was convicted of Title 21, U.S.C. ß 331(t);
333(a) (2) and 353 (c) (3) (A) (ii) (I)- Unlawful Sale of Hospital Drugs.
Smith was later sentenced to six (6) months of home detention, five
(5) years probation, ordered to pay the University of Colorado Hospital
$50,000 in restitution, and fined $25,000.
On September 27, 2002, WINER was convicted of Title 21, U.S.C. ß 353
(e) (2) (A), 331(t) and 333(b) (1) (D) - Wholesale Distribution of Prescription
Drugs Without a License. WINER was also convicted of Title 18, U.S.C.
ß 2- Aiding and Abetting. WINER was later sentenced to six (6) months
of home detention, three (3) years probation, and fined $100,000.
On October 24, 2002, Dr. Stephen M. CICERO was convicted of Title 21,
U.S.C. ß 331(t), 333(b) (1) and 353(c) (1) - Selling of Drug Samples.
CICERO was later sentenced to six (6) months of home detention, two
(2) years probation, and fined $30,000.
Kansas City Field Office
Convictions/Sentencing
This case involved the sale of unlabeled/adulterated diet drugs in Pasadena,
Texas by an alleged medical doctor from Mexico. The alleged doctor,
Dagoberto PAZ-TAMEZ is not licensed to practice medicine in the state
of Texas or anywhere else within the United States. This case was worked
jointly with the Harris County Precinct 6 Constableís Office, the Texas
Department of Public Safety (DPS), and the U.S. Postal Inspection Service.
Investigation revealed that PAZ-TAMEZ had been selling unlabeled diet
pills to patients for several years in the Pasadena, TX area. A sample
of the diet pills was submitted to the Harris County Precinct 6 Constableís
Office by a confidential informant. These samples were later submitted
to the Food and Drug Administration (FDA), Forensic Chemistry Center
(FCC), and were found to contain amphetamines and other dangerous substances.
On August 22, 2002, PAZ-TAMEZ was arrested in Pasadena, Texas. Diet
drugs and U.S. currency were seized consisting of the following: 4,350
tablets, $10,236 in U.S. currency, 30,488 gelatin capsules, and 44.5
pounds total weight of unlabeled diet drugs. The diet pills and tablets
seized were found to contain: Mazindol (amphetamine), Diethylpropion
(amphetamine), Diazepam (generic for valium), and Hydrochlorothiazide
(diuretic).
On March 16, 2002, PAZ-TAMEZ was convicted of Possession of a Controlled
Substance and Delivery of a Dangerous Drug. He was later sentenced to
ten (10) years deferred probation.
Kansas City Field Office
Convictions/Sentencing
A joint investigation with the United States Customs Service determined
that since February 25, 2002, Pedro RODRIGUEZ had made three attempts
to smuggle commercial quantities of prescription drugs from Mexico to
the U.S.
On June 18, 2002, RODRIGUEZ was indicted by a Federal Grand Jury in
the Southern District Texas (Laredo, TX). The indictment charged seventeen
(17) criminal counts.
On August 21, 2002, RODRIGUEZ was convicted of Title 21, U.S.C. ß 331(a)
- Introduction and Delivery of Misbranded Drugs into Interstate Commerce;
Title 18, U.S.C. ß 1001- False Statements; and Title 18, U.S.C. ß 545-
Illegal Importation.
On February 12, 2003, Chief United States District Judge George P. Kazen
sentenced RODRIGUEZ to twenty-three (23) months incarceration.
Los Angeles Field Office
Convictions/Sentencing
During 1995, the Food and Drug Administration (FDA), Office of Criminal
Investigations (OCI), Los Angeles Field Office (LAFO) initiated numerous
investigations of persons and businesses involved in illegal prescription
(Rx) drug diversion schemes. As a result of these investigations, the
scope and volume of prescription drug diversion activities was identified.
The LAFO subsequently established an undercover wholesale company to
facilitate the investigation and identification of buyers, sellers and/or
brokers involved in the fraudulent diversion of prescription drug products.
In April 1995, the LAFO initiated an undercover operation to corroborate
intelligence relative to prescription drug diversion activities by the
LAS VEGAS PHARMACEUTICAL DISTRIBUTORS, Inc., (LVPD). LVPD was a secondary
pharmaceutical wholesaler, located in Las Vegas, NV. Incident to the
investigation of LVPD, a second diversion network operated by HEALTH
EXPRESS Inc., Las Vegas, NV, was also identified as supplying large
quantities of diverted prescription drug products to LVPD.
This investigation and undercover operation revealed LVPD utilized commissioned
brokers to canvass and recruit closed-door/institutional pharmacies
nationwide to purchase millions of dollars worth of prescription drug
products at or below wholesale cost. The prescription drugs were purportedly
destined to nursing homes or other institutionalized patients. The closed
door/institutional pharmacy then illegally diverted the products to
LVPD for subsequent re-sale to other secondary wholesalers at substantial
profits. LVPD was operated by Benjamin ROSS, a son-in-law of the Chief
Executive Officer of LVPD. An associated wholesale business of LVPD,
C.D. Smith, was operated by another son-in-law of the CEO and was utilized
by LVPD to ìwashî the pedigree (paper trail) of the diverted prescription
drug products so as not to reveal the closed-door/institutional pharmacies
as the original sources of the drugs. C.D. Smith was purportedly able
to legitimately purchase prescription drug products direct from approximately
three hundred (300) pharmaceutical manufacturers. The direct purchase
authority of C.D. Smith enabled LVPD to covertly transfer their illegally
purchased products to C.D. Smith and then buy them back. The pedigree
only reflected the ìlegitimate saleî from C.D. Smith to LVPD.
Additionally, investigation and undercover contacts identified LVPD
had a business relationship with the BINDLEY WESTERN DRUG COMPANY (B/W),
San Dimas California Division, whereby LVPD returned diverted prescription
drug products for credit. The BINDLEY WESTERN DRUG COMPANY, home offices
in Indianapolis, IN, was one of the top ten drug wholesalers in the
United States. The undercover operation revealed aggressive ìkickbackî
and diversion schemes with closed-door/institutional pharmacies. These
schemes were perpetrated by the San Dimas California Division management
team headed by David BRINKLEY and Steven WATHEN. The undercover operation
also corroborated information provided by various confidential sources
that the corporate offices of BINDLEY WESTERN DRUG COMPANY had tacit
knowledge of and involvement in the illicit prescription drug diversion
activities.
On April 9, 1997, OCI and the Federal Bureau of Investigation (FBI)
served federal search warrants at LVPD and HEALTH EXPRESS Inc. The search
warrants resulted in the seizure of thousands of documents and records
which led to the identification of additional entities engaged in the
illegal diversion activities. Concurrent with the search warrants, numerous
federal grand jury subpoenas were served on known closed door/institutional
pharmacy sources located throughout the United States who engaged in
prescription drug diversion activities with LVPD.
Another tangent of the investigation was the identification of a second
fraud scheme between Lawrence RAY, formerly employed as a District Sales
Manager for Fisons Pharmaceutical Corporation, Salt Lake City, Utah,
and LVPD. RAY illegally sold to LVPD more than $500,000 worth of prescription
drug samples which were intended solely for promotional purposes to
physicians. LVPD falsely categorized the monies paid for the drug samples
as ìconsulting feesî and coached RAY in the proper responses should
he be questioned by law enforcement.
On February 4, 2000, ROSS was convicted of Title 18, U.S.C. ß 371- Conspiracy
to Commit Mail Fraud. LVPD ceased all operations and is now defunct.
ROSS was sentenced to six (6) months home confinement and three (3)
years formal probation.
On February 18, 1998, RAY was convicted of Title 18, U.S.C. ß 371- Conspiracy
to Transport Stolen Goods in Interstate Commerce; and Title 21, U.S.C.
ß 331(t) - Illegal Diversion of Drug Samples. RAY was sentenced to fifteen
(15) months in federal prison and ordered to pay a criminal fine in
the amount of $5,000.
On August 28, 2000, BINDLEY WESTERN DRUG COMPANY, Indianapolis, IN,
was convicted of Title 18, U.S.C. ß 371- Conspiracy to Transport Goods
and/or Property Obtained by Fraud. BINDLEY WESTERN DRUG COMPANY was
ordered to pay a criminal fine in the amount of $20 million dollars.
On October 5, 1999, BRINKLEY, was convicted of Title 18, U.S.C. ß 371-
Conspiracy to Commit Mail Fraud. BRINKLEY was sentenced to two (2) years
formal probation.
On February 26, 2001, WATHEN, was convicted of Title 18, U.S.C. ß 371-
Conspiracy to Transport Stolen Goods. WATHEN was sentenced to one (1)
year formal probation and ordered to pay a criminal fine in the amount
of $1,000.
On May 29, 2002, George HARVEY, was convicted of Title 18, U.S.C. ß
371-Conspiracy to Commit Mail Fraud. HARVEY received commissions for
brokering the illegal sales of pharmaceutical drug products. HARVEY
was later sentenced to five (5) years formal probation and ordered to
pay a criminal fine in the amount of $390,000.
The conclusion of the investigation of LVPD resulted in the felony convictions
of seventeen (17) individual and corporate entities. These individuals
and corporate entities were located in Oregon, Florida, Iowa, California,
Nevada, and Minnesota. Criminal fines were assessed in excess of $22
million dollars.
This and other diversion schemes present a serious public health danger
in that these illicit commercial channels provide widespread dissemination
of counterfeit and otherwise unsafe, ineffective drugs, and corrupt
pedigree and recordkeeping documentation required by federal laws and
regulations.
Metro Washington Field Office
Convictions/Sentencing
This case was initiated based upon information from a qui tam action
filed under the Civil False Claims Act (31 U.S.C., ß 2739-3733). Under
this statute, a private citizen may bring a civil fraud action in the
name of the United States and receive a portion of any judgment or settlement
in the action. DENTSPLY INTERNATIONAL Inc., whose headquarters are in
York, Pennsylvania, is the largest dental device manufacturer in the
world. DENTSPLYís Caulk Division, located in Milford, Delaware, manufactured
dental cement called Advance Hybrid Ionomer. The Advance Hybrid Ionomer
was manufactured from late 1994 until approximately 2000. During that
time period, DENTSPLY received complaints from dentists that patients,
who had been applied with the cement, were experiencing fractured teeth
and roots, pulpal death, and cracked crowns.
DENTSPLY was required to report these complaints to the United States
Food & Drug Administration (FDA) under provisions of the Federal Food,
Drug & Cosmetic Act. FDA regulations require manufacturers to report
serious injuries and malfunctions to the FDA on a Medical Device Report
(MDR). DENTSPLY did not file any MDRs with the FDA for these reported
injuries. DENTSPLYís failure resulted in the submission of false claims
to the Department of Veterans Affairs and the Department of Defense.
Both agencies require government contracts to be in compliance with
all FDA statutes and regulations.
On March 6, 2003, DENTSPLY INTERNATIONAL, Inc. agreed to pay $600,000
to the United States to resolve civil claims that the company submitted
false and fraudulent bills for payment to the Department of Veterans
Administration and the Department of Defense in connection with the
sale of their now discontinued Advance Hybrid Ionomer.
This case was investigated by FDAís Office of Criminal Investigations,
the Defense Criminal Investigative Service, the Naval Criminal Investigative
Service, and the Department of Veterans Affairs - Office of Inspector
General.
Miami Field Office
Convictions/Sentencing
This investigation was referred to the Office of Criminal Investigations
(OCI) by the Food and Drug Administration (FDA) San Juan District Office.
During a routine inspection of the State Public Health Hospital (CDT
Bayamon), Consumer Safety Officer (CSO) Daryl DeWoskin, noted numerous
questionable event entries and other notations attributed to Caro ACEVEDO,
MD, a clinical investigator for Investigational New Drug study (IND)
#45-488. IND #45-488 related to pre-market studies of the drug Floxin
Otic 3%, a treatment for acute otitis externa (swimmerís ear), and was
sponsored by the Daiichi Pharmaceutical Company. Investigation by the
San Juan District Office and OCI revealed that ACEVEDO had fabricated
participants in the study, failed to report adverse effects noted in
the study, failed to maintain accountability of study medications, provided
false and fraudulent information to the FDA, and diverted funds intended
to compensate participants to his own use.
On February 16, 2001, ACEVEDO was convicted of Title 18, U.S.C. ß 371
ñ Conspiracy. ACEVEDO was sentenced to a $10,000 fine and twenty-four
(24) months probation. The Commonwealth Board of Medical Examiners suspended
his license to practice medicine for two years in June 2001.
On February 27, 2003 coordination with the San Juan District revealed
that ACEVEDO had failed to respond to his Notice of Disqualification,
pursuant to Title 21, C.F.R., Part 16 and 312. ACEVEDO was formally
disqualified by the FDA as a clinical investigator on August 24, 2002.
New York Field Office
Convictions/Sentencing
This investigation was initiated based on information received from
the New York State, Office of Professional Discipline (NYS/OPM) located
in Rochester, NY. The NYS/OPM advised that Naturopathic Physician, Gary
BARRAGATO, claimed he was a doctor and that BARRAGATO was illegally
treating patients in his Rochester, NY motel room with unapproved new
foreign injectible prescription drugs.
Records checks disclosed that BARRAGATO had prior state convictions
for practicing medicine without a license in Texas and New Mexico, and
investigation conducted with the Monroe County Sheriffís Office and
NYS/OPM confirmed that he was doing so in Rochester, NY.
On April 23, 2002, BARRAGATO was indicted on an eight (8) count indictment
charging him with violations of Title 21, U.S.C. ß 331 and 333- Misbranded
Drugs; and Title 18, U.S.C. ß 1001(a) - False Statements.
On April 26, 2002, an arrest warrant was issued by the Western District
of New York. BARRAGATO was subsequently arrested in Daytona, FL. and
arraigned in Rochester, NY.
On October 24, 2002, BARRAGATO appeared before Federal District Court
Judge Michael Telesca and was convicted of Title 21, U.S.C.ß 331( c
) and 333(a)(2) - Receiving Misbranded Drugs in Interstate Commerce.
On January 21, 2003, Judge Telesca sentenced BARRAGATO to serve a five
(5) year period of probation, and ordered him to pay a $5,000 fine.
New York Field Office
Convictions/Sentencing
This case was initiated based on reports that between August and November,
1999, Dr. Allyn NORMAN falsified data in an Investigational New Drug
(IND) study sponsored by the Merck Pharmaceutical Company.
Investigation conducted disclosed that NORMAN completely fabricated
six of twelve patients required for this IND.
On October 28, 2002, NORMAN appeared before U.S. Magistrate Judge Hugh
Scott and was convicted of Title 21, U.S.C. ß 331(e) and 333(a)(1) -
Failure to Establish or Maintain Adequate Records of the Disposition
of an Investigational New Drug.
On January 27, 2003 Judge Scott sentenced NORMAN to pay a $5,000 fine.
New York Field Office
Convictions/Sentencing
This case originated on September 29, 1999 based on information provided
by the Kaleida Health organization. The Kaleida Health organization
alleged that a hospital pharmacist, Charles GEORGE, had stolen and diverted
hospital drugs to his own pharmacy for re-sale.
During the course of this investigation, volumes of hospital pharmacy
records, as well as, GEORGEís bank records and inventory records from
his personally owned pharmacy were reviewed. During this review, it
was discovered that several prescriptions belonging to several relatives
of GEORGE appeared to have been altered and increased in both pill and
refill quantities. Interviews conducted with the prescribing physicians
verified that the altering of the subject prescriptions was not authorized.
Handwriting analysis confirmed that the subject prescriptions had been
forged.
On September 11, 2002, GEORGE appeared in U.S. Magistrateís Court in
Buffalo, NY, and was convicted of one (1) count of Title 21, U.S.C.
ß 331(k) and 331 (a) (1) - Misbranding a Prescription Drug after Shipment
in Interstate Commerce.
On December 18, 2002, GEORGE was sentenced to one (1) year probation
and a $5,000 fine. The New York State Office of Professional Discipline
is currently conducting a disciplinary/license revocation investigation.
The Food and Drug Administration, Office of Criminal Investigations,
worked this case with members of the Western New York Health Care Fraud
Task Force. The Western New York Health Case Fraud Task Force is staffed
with Special Agents from the Federal Bureau of Investigation, the U.
S. Postal Inspections Service, the Department of Health and Human Services
- Office of the Inspector General, and the Internal Revenue Service.
New York Field Office
Convictions/Sentencing
This case was initiated in October 1998 based on information provided
by a Federal Bureau of Investigation cooperating witness (CW). The CW
had admitted to purchasing diverted pharmaceutical drugs over the course
of several years from James DUNCAN, a Proctor and Gamble representative.
According to the CW, DUNCAN would often remove empty pharmaceutical
drug bottles from the CWís recycling bin and return the bottles full
or partially full with a named medication.
From October 1998 to May 1999, the CW and DUNCAN engaged in several
electronically recorded meetings during which DUNCAN would sometimes
provide the CW with prescription drugs. The CW would either pay DUNCAN
cash for the prescription drugs delivered, or DUNCAN would add the total
to the balance previously owed to him by the CW.
On January 9, 2002, DUNCAN was arrested at his residence by the Office
of Criminal Investigations and the Federal Bureau of Investigation.
DUNCAN had previously rejected a plea agreement offered to him by the
United States Attorneyís Office, Eastern District of New York.
At the time of his arrest, DUNCAN was found to be in possession of 11
registered handguns that were subsequently seized by the Suffolk County
Licensing Bureau. As a condition of his release, DUNCAN surrendered
several rifles, approximately 250,000 rounds of ammunition, and a flak
jacket to the Suffolk County Police Department. In addition to small
quantities of several types of prescription drugs seized at DUNCANís
residence pursuant to a search warrant, 134 boxes of Prilosec physician
samples were seized.
On July 23, 2002, DUNCAN was convicted of Title 18, U. S. C. ß 371-
Conspiracy; Title 21, U. S. C. ß 331 (t) and ß 353 (c) (1)) - Knowingly
and Intentionally Conspiring to Sell and Trade Drug Samples; and Title
26, U. S. C. ß 7206 (1) - Filing a False Tax Return.
On February 21, 2003, DUNCAN was sentenced to twenty-one (21) months
incarcera
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