FDA/OCI
cases 2nd Quarter, 2003:
Addressees,
The following information relates to the second installment for 2003.
These OCI cases have received convictions or related judicial action.
The information is considered unrestricted.
Chicago Field Office
Sentencing/Convictions
The investigation was initiated on December 6, 2001 based on information
provided to the Office of Criminal Investigations (OCI) by the Racine
County, Wisconsin, Sheriffís Department. According to the Sheriffís
Department, Gordon John SIGL, a reserve Air Force Captain, was smuggling
steroids/drugs/growth hormone from other countries and using his official
credentials to bring the products back into the USA for resale. A Confidential
Informant (CI) was contacted by SIGL, via the Internet. SIGL stated
he was interested in starting a ìsteroid cycleî and needed a workout
partner. In subsequent e-mails, SIGL stated that he was using the steroids,
testosterone and decadurabolin, and that he obtained the drugs during
trips for the U. S Air Force Reserve.
On November 8, 2001, SIGL e-mailed the CI after his return from a trip
to Egypt which he had taken with the U.S. Air Force. SIGL stated that
he was going to start a 10 week steroid cycle with the steroids he brought
back from Egypt.
On December 11, 2001, the CI contacted SIGL. Later, on that same date,
SIGL sold the CI 20 ampoules of Egyptian sustenon for $300 which included
syringes. Again, SIGL stated that he purchased the steroids during his
trip to Egypt with the U.S. Air Force.
On March 25, 2002, SIGL sold the CI one 10ml bottle of Testerona 200,
as well as syringes to administer the steroid. SIGL said that he had
more testosterone at his house that he brought back from Mexico. SIGL
said that it was ì400 Testosteroneî (T-400) which was a stronger product.
On April 1, 2002, the CI purchased a quantity of T-400 from SIGL.
On May 3, 2002, a federal search warrant was executed. During the search,
three additional bottles of Mexican made veterinary steroids were seized.
In addition, SIGL provided a statement and admitted to smuggling the
steroids from other countries, and using military transport on one occasion
to complete the smuggling.
On May 21, 2002, SIGL was indicted, in the Eastern District of Wisconsin,
for violation of Title 21, U. S. C. ß 841(a) (1), 841(b) (1) (D) ñ Knowingly
and Intentionally Distributing Anabolic Steroids.
On April 25, 2003, SIGL was convicted of Title 21, U. S. C. ß 841(a)
(1), 841(b) (1) (D) ñ Knowingly and Intentionally Distributing Anabolic
Steroids. SIGL was sentenced to 18 months probation and ordered to pay
$1,200.00 in restitution.
Chicago Field Office
Sentencing/Convictions
On March 28, 2003, information was received regarding the possible tampering
of "over the counter" medications. The case involved the alleged tampering
of a box of Aleve Cold & Sinus medication and a bottle of Tylenol PM.
The tampering occurred at a local Jewel/Osco grocery store located at
6430 W. Irving Park Road, Chicago, IL. In both instances, the genuine
product was replaced with vitamin ìCî capsules. This case was worked
by the Office of Criminal Investigations (OCI) and the Chicago Police
Department (CPD).
Information was developed that one (1) box of Aleve Cold & Sinus had
recently been returned to the Jewel/Osco store, but no further information
pertaining to the return was available. Further, the Jewel/Osco store
also confirmed that two (2) bottles of Tylenol PM had recently been
returned and in one of the returns, a name and address was listed. The
Jewel/Osco store had a return of Tylenol PM on file dated March 11,
2003, with the customer listed as Michelle BUJAK, of 15042 S. Tripp,
Midlothian, IL. Subsequent checks on this address by the Midlothian
Police Department revealed that BUJAK's parents resided there.
On April 10, 2003, through additional investigative efforts, BUJAK voluntarily
appeared at the Area 5 Headquarters, CPD, and was interviewed. During
the interview of BUJAK, she confessed to the tampering of both products.
BUJAK stated that in both cases, she removed the medication and replaced
it with ìmulti-vitamins.î BUJAK stated her motivation was to ìget money
for groceriesî by returning the tampered products. BUJAK had no prior
criminal history.
The Office of the United States Attorney, Northern District of Illinois,
was consulted and deferred prosecution to the State of Illinois authorities.
BUJAK was charged with Theft by Deceptive Practices.
On May 12, 2003, BUJAK appeared in Cook County Court and was convicted
of one (1) count of Theft by Deceptive Practices. BUJAK was sentenced
to six (6) months of court supervision.
Chicago Field Office
Sentencing/Convictions
This case was initiated based on information from the Highland, IN,
Police Department (HPD). Investigators related that, according to two
former employees of Highland Medical Center (HMC), employees of HMC
were engaged in the administration of unapproved drugs for the treatment
of cancer. Highland Police Department requested assistance from the
Office of Criminal Investigations, since the drugs being administered
were unapproved.
On August 1, 1996, a search warrant was issued. Pursuant to this warrant,
unapproved drugs, patient medical records, business records, and other
items associated with the receipt and utilization of unapproved drugs
were seized from the HMC.
Subsequent investigation revealed that HMC had submitted over $2 million
dollars in fraudulent insurance claims to dozens of private insurance
companies for chemotherapy, when no chemotherapy had been provided.
In lieu of chemotherapy, HMC administered the unapproved drugs. In addition,
Dr. Wilbert C. STREETER, (HMCís Owner), Jerry A. AVERILL (Business Administrator),
Walter T. (Tom) KONHORST (Purchasing Agent), and Geraldine COBB (Bookkeeper),
were engaged in the laundering of the insurance checks issued in payment
of the fraudulent insurance claims to avoid reporting requirements to
the Internal Revenue Service. Furthermore, STREETER and KONHORST were
involved in a conspiracy to solicit and receive Medicare kickbacks from
Robert G. WAITE, owner of ProPharma Sterile Products, Inc. The kickbacks
were paid for the referral of patients from HMC to ProPharma.
On November 28, 2000, Robert WAITE was convicted of violating Title
18, U. S. C., ß 2 -Aiding and Abetting, and Title 18, U. S. C. ß 664
-Theft/Embezzlement from Employee Benefit Plan.
On January 19, 2001, Darlene WAITE was convicted of violating Title
18, U. S.C. ß 2 -Aiding and Abetting, and Title 18, U.S.C. ß 664 -Theft/Embezzlement
from Employee Benefit Plan.
On November 19, 2001, AVERILL was convicted of violating Title 18, U.S.C.
ß 371 ñConspiracy; Title 18 U.S.C. ß 1341 -Mail Fraud; Title 18, U.S.C.
ß 1956(h) ñ Conspiracy to Commit Money Laundering; and Title 18, U.S.C.
ß 1956(a) (1) (A) (i) -Money Laundering.
On November 20, 2001, KONHORST was convicted of violating Title 18,
U.S.C. ß 1341 - Mail Fraud; and Title 18, U.S.C. ß 1956(h) ñConspiracy
to Commit Money Laundering.
On January 25, 2002, STREETER was convicted of violating Title 18, U.S.C.
ß 1956(a) (1) (A) (i) -Money Laundering.
On June 12, 2002, AVERILL was sentenced to twenty-one (21) months incarceration
and three (3) years probation. AVERILL was ordered to pay restitution
of $1,902,382.00 jointly and severally with the other defendants.
On July 9, 2002, Robert G. WAITE was sentenced to eighteen (18) months
incarceration, three (3) years probation, and ordered to make restitution
of $ 309,146.00 jointly and severally with Darlene WAITE.
On July 11, 2002, Darlene WAITE was sentenced to eighteen (18) months
incarceration, three (3) years probation, and ordered to make restitution
of $ 309,146.00 jointly and severally with Robert G. WAITE
On February 12, 2003, STREETER was sentenced to twenty-one (21) months
incarceration and two (2) years probation. STREETER was ordered to pay
restitution of $1,902,382.00 jointly and severally with the other defendants.
On April 22, 2003, KONHORST was sentenced to twelve (12) months probation
and ordered to pay restitution of $1,902,382.00 jointly and severally
with the other defendants.
Chicago Field Office
Sentencing/Convictions
Bruce NEWBY is the target of this investigation as a result of another
case investigated by the New York Field Office of the Office of Criminal
Investigations (OCI). In the aforementioned case, suspect Joseph FIORE
made telephone contact with NEWBY. During FIOREís taped conversation
with NEWBY, NEWBY let it be known that he is involved in the redistribution/reselling
of stolen/diverted medical devices. During the taped conversation, NEWBY
expressed his desire to obtain stolen/diverted medical devices from
FIORE in order to resell/redistribute to foreign locations for profit.
As a result of the taped conversations between NEWBY and FIORE, a ìcontrolled
deliveryî to NEWBYís residence was arranged. The controlled delivery
was to be followed by a search warrant of NEWBYís residence.
On July 11, 2001, the controlled delivery and subsequent search warrant
were executed at NEWBYís residence. Pursuant to the search, NEWBY agreed
to provide cooperation and assistance in the investigation. As part
of his assistance, NEWBY met with Christopher LYON and Terrance OíCONNOR,
both ex-Ethicon salesmen. NEWBY purchased restricted medical devices
from both co-conspirators.
On November 01, 2001, NEWBY was convicted of Title 18, U. S. C. ß 371-
Conspiracy; and Title 26, ß U.S.C. 70(1)-Filing False Tax Return.
On December 7, 2001, LYON, accompanied by his attorneys, provided a
proffer. LYON spoke of his collaboration with NEWBY in the dealing of
stolen medical devices.
LYON stated his source for the devices was John GOODWIN. He stated it
was clear to him after the first or second ìshipmentî that the products
provided to him by GOODWIN were stolen. LYON stated that he knew or
had reason to believe that the products were stolen, because they were
still in original packaging. LYON stated that he had also acquired products
from conventions he had attended while still employed with Ethicon.
After the convention was over, the attending salesman would just ìsplit
and divideî the entire product on hand. LYON also acquired products
by removing them from hospitals at their direction and ìsometimes forgettingî
to credit the hospitals for the removed product. LYON maintained that,
aside from product he had accumulated himself as an Ethicon salesman,
GOODWIN was his only outside source of product. LYON agreed to assist
the OCI in their investigation of GOODWIN.
From January 30, 2002, to February 8, 2002, LYON participated in telephone
conversations with GOODWIN. LYON agreed to meet GOODWIN at the EZ Mini
Storage, located at 2570 Crooks Road, Rochester Hills, Michigan, on
Tuesday, February 12, 2002. The purpose of the meeting was to make a
$2,000 payment to GOODWIN for money owed to him from a previous deal
and to obtain additional products that GOODWIN had stored in a storage
unit he was renting.
On February 12, 2002, LYON provided OCI with a copy of an inventory
list that was faxed to him by GOODWIN showing products that GOODWIN
was going to sell LYON. The value of the products that GOODWIN intended
to sell LYON was approximately $199, 974.00. On the same date, after
LYON met with GOODWIN, the $2000.00 was seized and a search warrant
was executed on the storage unit which contained twenty-four (24) boxes
of miscellaneous medical devices. In total, thirty-one (31) boxes of
miscellaneous medical devices were seized.
On May 9, 2002, NEWBY was sentenced to 180 days of home confinement,
two (2) years of probation, 200 hours of community service, and ordered
to file and pay amended tax returns and penalties (approximately $80,000.00).
On June 10, 2002, LYON was convicted of Title 18, U.S.C. ß 371 -Conspiracy
to Violate Title 21, U.S.C. ß 331 & 333(a) (2) - Introduction into Interstate
Commerce of Misbranded Medical Devices with the Intent to Defraud or
Mislead.
On June 10, 2002, OíCONNOR, the ex-Ethicon salesman and associate of
NEWBY, admitted to completing one transaction with NEWBY in which OíCONNOR
received approximately $19,500.00. Subsequently, OíCONNOR executed a
pre-trial diversion agreement. As per the agreement, OíCONNOR would
serve one (1) year of supervised probation and would re-pay Ethicon
the $19,500.00 he received from NEWBY.
On November 12, 2002, GOODWIN was convicted of violating Title 18, U.S.C.
ß 371 ñConspiracy; Title 18 U.S.C. ß 2314 -Interstate Transportation
of Stolen Property, and Title 21 U.S.C. ß 331 and 333(a) (2) - Introduction
into Interstate Commerce of Misbranded Medical Devices with the Intent
to Defraud or Mislead.
On March 13, 2003, GOODWIN was sentenced to eighteen (18) months incarceration
in a federal prison, twenty-four (24) months of supervised release after
his prison term, and ordered to pay $175,000.00 in restitution to Henry
Ford Health Care.
On April 22, 2003, LYON, was sentenced to serve twenty-four (24) months
of probation, and ordered to pay $300,000.00 in restitution ($100,000.00
to Ethicon and $200,000.00 to Henry Ford Health Care).
Chicago Field Office
Sentencing/Convictions
This investigation originated on July 16, 1996, pursuant to information
provided by FDAís Minneapolis District Office regarding a suspected
illegal drug mail order business in the Minneapolis area. The business,
D & K Supplements, was distributing promotional material advertising
the sale of anabolic steroids, Clenbuterol, HGH, and other prescription
drugs.
During the course of this investigation it was determined that forged
medical prescriptions were being used to obtain Roxanol, a liquid morphine.
Forensically, it appeared that a blank prescription was being copied
and authored by the same person for the Roxanol. A total of one hundred
twenty-three (123) forged prescriptions for Roxanol were obtained from
various pharmacies throughout the Minneapolis/Saint Paul area. In conjunction
with local law enforcement, Ramsey County Sheriffís Department and the
Hennepin County Drug Task Force, three search warrants were executed
leading to evidence crucial to the investigation. Grand Jury subpoenas
were served for handwriting exemplars on three of the defendants. The
U. S. Secret Service, Forensic Services Division, conducted the handwriting
analysis on the forged prescriptions (112 prescriptions) and a journal
seized during one of the arrests. The handwriting examiner concluded
that David TEREAULT authored one hundred and six (106) of the prescriptions
as well as the journal.
On May 8, 2002, TEREAULT, Douglas GERHART, William FEE, Jamison CONLIN,
Sherry STIFFLER and Todd STIFFLER were indicted by a Federal Grand Jury,
District of Minnesota, for violations of Title 18, U.S.C.ß 371 ñ Conspiracy;
Title 21, U.S.C.ß 331 (a), 331 (k), 333 (a) (2), 353 (b) (1), 353 (b)
(1) (A), 353 (b) (1) (B) ñ Introduction into Interstate Commerce of
Misbranded Drugs; and Title 21, U.S.C. ß 846 and 841 (b) (1) (C) - Conspiracy
to Possess with Intent to Distribute Controlled Substances. The indictment
was a result of the defendantsí scheme to obtain large volumes of the
Roxanol using forged medical prescriptions and then using and/or selling
the Roxanol at a profit. All defendants were arrested and entered pleas
of not guilty at their arraignments.
On August 28, 2002, GERHART and CONLIN were convicted of violations
of Title 18, U.S.C. ß 371- Conspiracy; and Title 21, U.S.C. ß 331(a)
and (k), 333(a) (2), and 353(b) (1) (A) and (B)] - Introduction into
Interstate Commerce of Misbranded Drugs.
On August 30, 2002, FEE and Todd and Sherry STIFFLER were convicted
of violations of Title 18, U.S.C. ß 371- Conspiracy; and Title 21 U.S.C.
ß 331(a) and (k), 333(a) (2), and 353(b) (1) (A) and (B) ñ Introduction
into Interstate Commerce of Misbranded Drugs. On the same date, TEREAULT
was convicted of Title 21 U.S.C. ß 846 and 841 (b) (1) (C)] - Conspiracy
to Possess with Intent to Distribute Controlled Substances.
On December 13, 2002, GERHART was sentenced to six (6) months incarceration
at the Volunteers of America, Minneapolis, Minnesota, and placed on
supervised release for a term of two (2) years after incarceration.
On December 13, 2002, FEE was sentenced to one (1) year and one (1)
day incarceration, and placed on supervised release for a term of two
(2) years after incarceration.
On December 18, 2002, CONLIN was sentenced to six (6) months incarceration
with the United States Bureau of Prisons and placed on supervised release
for a term of two (2) years after incarceration.
On April 3, 2003, Sherry STIFFLER was sentenced and required to reside
at the Volunteers of America, Minneapolis, Minnesota, for a period of
six (6) months with work release privileges, and placed on probation
for a period of three (3) years.
On April 3, 2003, Todd STIFFLER was sentenced to one (1) year and one
(1) day incarceration, and placed on supervised release for a term of
two (2) years after incarceration.
On April 11, 2003, TEREAULT was sentenced to fourteen (14) years incarceration.
Kansas City Field Office
Sentencing/Convictions
This case was initiated based on information received from the U.S.
Department of Fish and Wildlife Service. The information referred to
a massive bird poisoning incident in Seligman, MO involving a FDA regulated
vet drug called Famphur. Famphur is contained in the product Warbex.
The only approved use for Warbex is for the treatment of lice and grub
infestation in cattle. Among the birds poisoned were federally protected
migratory birds including eagles, hawks and owls. The location where
the poisoning occurred was determined to be on the William GUNDEL farm
near Seligman, MO. Both GUNDEL and his wife, Sarah, were interviewed.
They both initially denied deliberating poisoning the birds, but later
admitted that they had mixed grain with the Warbex in an attempt to
kill nuisance birds such as starlings and sparrows. They also refused
to disclose were they got the idea to use Warbex to poison the birds.
In a later interview, they admitted that Donald E. SMITH gave them the
idea and supplied the Warbex. SMITH was subsequently interviewed and
admitted that it was his idea to use the Warbex and that he supplied
the Warbex to the GUNDELís.
On December 12, 2002, SMITH was convicted of violating Title 21, U.S.C.
ß 331 (k) ñ Adulteration of a Drug.
On February 20, 2002, SMITH was sentenced to two (2) years probation.
William GUNDEL was issued a citation by the U.S. Department of Fish
and Wildlife Service and paid a $500.00 fine.
Metro Washington Field Office
Sentencing/Convictions
This case was initiated after two anonymous letters were received at
the FDA and Senator Edward Kennedyís office. These letters provided
allegations pertaining to a medical device known as the Ancure endograft
system (Ancure Device) manufactured by EndoVascular Technologies, Inc.
(EVT), a subsidiary of Guidant Corporation, in Menlo Park, CA.
The Ancure Device is a surgically implanted device approved for treating
abdominal aortic aneurysms. The allegations included the intentional
failure to report serious adverse events to the FDA. Under federal law,
a company is required to report to FDA any incident in which a medical
device may have caused or contributed to a death or serious injury,
or the medical device experienced a malfunction that would be likely
to cause or contribute to a death or serious injury if the malfunction
were to recur.
This investigation determined that EVT had failed to file with FDA 2,628
Medical Device Reports, each representing an incident in which the Ancure
Device malfunctioned or the use of the device was associated with death
or serious injury. There were a total of 7,632 Ancure Devices sold.
Among the unreported incidents were 12 deaths and 57 emergency procedures
in which a physician converted the operation into a more invasive procedure.
On June 9, 2003, a Criminal Information was filed against EVT relative
to covering up malfunctions of the Ancure Device. The Information charged
EVT with ten felonies, including nine (9) counts of violating Title
21, U.S.C. ß 331(a) and 333(a)(2) - Introducing a Misbranded Medical
Device into Interstate Commerce, and one (1) count of violating Title
18, U.S.C. ß 1001 - False Statements to the FDA. The misbranding charges
stem from the fact that the company intentionally failed to report within
30 days, as required by law, malfunctions to the device that may have
caused or contributed to deaths or serious injuries. The false statement
charge relates to the fact that the company provided an FDA Investigator
an incomplete and misleading list of complaints when a request was made
during a routine inspection for all complaints of malfunctions.
On June 12, 2003, EVT was convicted and sentenced and ordered to pay
$92.4 million in criminal and civil fines, including $10.9 million to
be forfeited to the U.S. Department of Justice, Asset Forfeiture Fund.
The prosecution of the criminal case was the result of a three-year
investigation by FDAís Office of Criminal Investigations and the Federal
Bureau of Investigation.
Metro Washington Field Office
Sentencing/Convictions
In December 2001, the Metro Washington Field Office, Office of Criminal
Investigations, received information from the FDA, Center for Drug Evaluation
and Research (CDER) about a Baltimore, Maryland based Internet website
(www.ecstacy-stuff.com) that
offered for sale what appeared to be street drug alternatives.
In January, February and March 2002, a total of 13 undercover purchases
were made from the Internet website. Products purchased included TRIP2NIGHT,
HYDOBUDS, X tablets, THUNDER, and RAVE X PILLS.
On August 8, 2002, a search warrant was conducted at the residence and
business of Louis OSTRAW. Items seized included TRIP2NIGHT and other
street drug alternatives.
On September 2, 2002, OSTRAW agreed to fully cooperate with the government
and provided information that identified the source of the TRIP2NIGHT.
On February 21, 2003, OSTRAW was convicted of one (1) felony count of
Title 21, U.S.C. ß 331(a) and 333(a) (2) - Introduction of a Misbranded
Drug for Sale.
On April 23, 2003, OSTRAW was sentenced to two (2) years probation and
ordered to pay $1000.00.
Metro Washington Field Office
Sentencing/Convictions
This investigation stems from information provided by the West Manchester
Township Police Department, York, PA to the Metro Washington Field Office
of the Office of Criminal Investigations (OCI). The information provided
was that Christopher DAVIS, an Internal Medicine physician, was arrested
on October 2, 2001, and charged with burglary because he broke into
his former medical practice. DAVIS admitted to breaking in to the office
in order to steal Nubain (Nalbuphine HCl) from the drug storage drawer
in the facility. Davis admitted to a five year drug addiction problem
with this drug which is an injectable potent, analgesic intended for
moderate to severe pain. Additionally, OCI was advised that Davis admitted
tampering with the Nubain over a number of years both while employed
at the clinic and afterwards, by injecting saline solution back into
the vials after removing some of the Nubain for personal use.
On July 9, 2002, AUSA Daniel filed a one count felony information in
the U.S. District Court, Middle District of Pennsylvania. The information
charged DAVIS with a violation of Title 21, U.S.C. ß 331(b); 333(a)
(2) - Introduction into Interstate Commerce of Adulterated Drugs.
On July 29, 2002, DAVIS was convicted of one (1) felony count of Title
21, U.S.C. ß 331(b); 333(a) (2) -Introduction into Interstate Commerce
of Adulterated Drugs.
On May 2, 2003, DAVIS was sentenced to two (2) years supervised probation
and ordered to pay a $500.00 fine.
This case was investigated by OCI and the West Manchester Township Police
Department, York, PA.
Metro Washington Field Office
Sentencing/Convictions
This investigation was initiated based on information received that
several individuals would be distributing illegal nitrous oxide during
a concert by the Dave Mathews Band. The concert date was scheduled for
June 9, 2001 at RFK Stadium in Washington, DC.
On May 8, 2001, a meeting was held at the United States Attorneyís Office
(USAO), District of Columbia. In attendance were the FDAís Office of
Criminal Investigations (FDA/OCI), the Metropolitan Police Department
(MPD), Narcotics and Special Investigation Division, and the Deputy
Chief, Narcotics Section, USAO. The Deputy Chief agreed to support a
joint operation to conduct probable cause arrests during the concert
if illegal activity was identified. The probable cause arrests would
be based on the unlawful distribution of a misbranded prescription drug.
On June 9, 2001, seventeen (17) probable cause arrests were executed
on individuals selling nitrous oxide in balloons. Subsequent to the
arrests, the FDA, Forensic Chemistry Center (FCC), conducted a sampling
of the tanks alleged to contain nitrous oxide. The FCC confirmed that
the contents in the tanks sampled were consistent with nitrous oxide.
On July 31, 2001, all charges were dismissed by the U. S. Magistrate
presiding over the matter based on an interpretation that the Federal
Food, Drug and Cosmetic Act was not intended to apply to individuals,
but to manufacturers, distributors and professionals such as physicians
and pharmacists.
On August 1, 2001, the government filed a Notice of Appeal to the Chief
Judge, U. S. District Court, Washington, DC.
On November 29, 2001, the Chief Judge issued a Memorandum Opinion reversing
the previous ruling and ordered that all cases be reinstated.
Eight (8) defendants were convicted of Title 21, U.S.C. ßß 331 (a),
333 (a) (1), 353 (b) (1), and 352 (f) (2) ñ Distribution of a Misbranded
Drug.
As a result of this investigation, there were seventeen (17) arrests,
eight (8) convictions, three (3) dismissals and six (6) defendants were
placed into a pretrial diversion program. In a pre trial diversion program,
convictions are withheld for one year pending good behavior. If at the
end of that period, if the defendant has not been involved in further
criminal activity, the charges are dismissed. This case was investigated
by OCI and the Metropolitan Police Department.
Metro Washington Field Office
Sentencing/Convictions
This case originated in early 1997, based upon a qui tam suit filed
in the Eastern District of Pennsylvania by the Vice President of Sales
for TAP Pharmaceutical Products, Inc. (TAP). The case involves a conspiracy
by the firm and medical doctors to violate the Prescription Drug Marketing
Act (PDMA) by billing patients, Medicare, Medicaid and other federally
funded insurance programs, for doses of Zoladex, a drug used in the
treatment of prostate cancer, that had been provided free of charge
by AstraZeneca. In October 2001, TAP agreed to pay $875,000,000 to resolve
civil and criminal liabilities in connection with its pricing and marketing
of Lupron, which has the same indicated uses as Zoladex.
This investigation determined that employees of AstraZeneca provided
thousands of free samples of Zoladex to physicians knowing and expecting
that certain of those physicians would prescribe and administer the
free drug samples to their patients and then bill those free samples
to the patients and federally funded insurance programs. The company
also induced physicians to purchase Zoladex by paying illegal remuneration
in various forms including free Zoladex, unrestricted educational grants,
business assistance grants and services, travel and entertainment, consulting
services and honoraria.
On June 20, 2003, AstraZeneca pleaded guilty to a one (1) felony count
of Title 21, U.S.C. ßß 353(c), 331(t) and 333(b)(a)(B) - Sale of Drug
Samples; and Title 18, U.S.C. ß 371 -Conspiracy. AstraZeneca was sentenced
to pay a $63,872,156.00 criminal fine.
AstraZeneca also agreed to settle its civil liabilities and to resolve
allegations that its fraudulent drug pricing schemes and sales and marketing
misconduct had caused false and fraudulent claims to be filed with federal
and state health care programs. The agreed payments are $266,127,844.00
to the U.S. government for claims filed with the Medicare, TriCare,
U. S. Department of Defense and the Railroad Retirement Board Medicare
programs, and a total of $24,900,000.00 to the U.S. and state governments
for claims involving state Medicaid programs.
In total AstraZeneca agreed to pay $355,000,000.00 to resolve the criminal
charges and civil liabilities. The investigation, which is continuing,
has so far resulted in charges against three physicians for their role
in conspiring to bill for free Zoladex samples.
This investigation is being conducted by FDAís Office of Criminal Investigations,
the U.S. Department of Health and Human Services, Office of Inspector
General, the Defense Criminal Investigative Service and the Federal
Bureau of Investigations.
Metro Washington Field Office
Sentencing/Convictions
This investigation was initiated based on information regarding the
sale and distribution of a foreign injectable muscular stimulant (Kynoselen)
from the website www.equinestar.com.
The FDA, Center for Veterinary Medicine deemed the drug Kynoselen to
be misbranded and unapproved for sale in the United States. The website
was registered to Sunny KURJIAN, President of Equine Star Horse and
Cattle Products, who operated the company from his residence in Brunswick
Hills, OH.
On June 6, 2002, the Office of Criminal Investigations with assistance
from the Medina County, Ohio Drug Task Force, executed a search warrant
on the company.
On March 4, 2003, KURJIAN was charged with violating Title 21, U.S.C.
ß 331(a) and 333(a) (2) ñ Introduction of Misbranded Drugs into Interstate
Commerce.
On June 3, 2003, KURJIAN was convicted of this charge. KURJIAN was sentenced
to three (3) years supervised probation, six (6) months home confinement
program with electronic monitoring, and participation in a mandatory
drug treatment program.
Miami Field Office
Sentencing/Convictions
On April 4, 2002, the Office of Criminal Investigations, Miami Field
Office, was notified that Alpha Brokers Corporation, a customs broker,
had assisted CARLOS SEAFOOD, INC. (CARLOS SEAFOOD), in falsifying dump
tickets for lobster meat and tails that were refused entry by FDA due
to salmonella contamination. The lobster meat and tails were then released
by CARLOS SEAFOOD for sale and distribution.
On November 20, 2002, CARLOS SEAFOOD, one of South Floridaís largest
seafood importers, was convicted of violations of Title 21, U.S.C.,
ß 331(a) and 333 (a)(2)- Introduction into Interstate Commerce of an
Adulterated Food with the Intent to Defraud; Title 16, U.S.C. ß 3372
(d)(1) and 3373 (d) (3) (A) and Title 18, U.S.C. ß 542 ñ Importation
of a Food into the Commerce of the United States using False Documents.
In addition, Lillian BERDEAL, Vice President of CARLOS SEAFOOD, was
convicted of violating Title 18, U.S.C. ß 4 ñ Misprison of a Felony.
On January 29, 2003, CARLOS SEAFOOD was sentenced by Judge Moreno, Southern
District of Florida, to five (5) years probation and was fined $350,000.00.
BERDEAL was sentenced to three (3) years probation and was fined $5000.00.
Miami Field Office
Sentencing/Convictions
This investigation was initiated based on information received from
a private investigator located in Southern CA, who was on contract with
several U.S. pharmaceutical companies. The private investigator purchased
various prescription drugs from pharmacies located in Tijuana, Mexico.
The prescription drugs were generics of Prozac, Premarin and others.
Additionally, U.S. citizens purchased drugs from these pharmacies and
hand-carried the drugs back to the U.S. Several of these drugs declared
on the labeling that they had been manufactured by JEAN-MARIE PHARMACAL
in Hong Kong and exported by DNA PHARMACEUTICALS, INC. (DNA PHARMACEUTICALS),
which is located in Miami FL. DNA PHARMACEUTICALS is licensed as a wholesaler
in FL, but not as a re-packer.
On January 24, 2003, OSCAR DEL CID, President of VITAL INDUSTRIES (parent
company of DNA PHARMACEUTICALS), was convicted of violating Title 21,
U.S.C. ß 331 (k) ñ Introduction into Interstate Commerce of an Adulterated
Drug. VITAL INDUSTRIES was convicted of violations of Title 18, U.S.C.
ß 1956 ñ Money Laundering; Title 18, U.S.C. ß 2 ñ Aiding and Abetting;
and Title 21, U.S.C. ß 331 (k) ñ Introduction into Interstate Commerce
of an Adulterated Drug. CARLOS ALFARAS, Vice President of VITAL INDUSTRIES,
was convicted of violating Title 21, U.S.C. ß 331 (k) ñ Introduction
into Interstate Commerce of an Adulterated Drug.
On June 27, 2003, DEL CID and ALFARAS were each sentenced to one year
probation, with 6 months house arrest to be served concurrently and
fined $20,000.00 each. VITAL INDUSTRIES was sentenced to five (5) years
probation, fined $260,000.00, and ordered to pay a monetary forfeiture
in the amount of $205,985.02.
New York Field Office
Sentencing/Convictions
On October 3, 2001, information was received from the United States
Attorneyís Office, Eastern District of Philadelphia, and the Federal
Bureau of Investigation that Scott KNOX and Theodore SOSANGELIS, the
owners of East Coast Ingredients, 211 South Street, Philadelphia, PA,
were misbranding, distributing, and trafficking in counterfeit dietary
supplement products.
KNOX and SOSANGELIS conspired to distribute counterfeit dietary supplement
products through their company, East Coast Ingredients. They manufactured
a different version of the dietary supplement products manufactured
by Muscletech. They then placed counterfeit Muscletech labels on these
counterfeit products, and distributed and sold these counterfeit dietary
supplement products to customers who believed that they were purchasing
legitimate Muscletech products.
On October 1, 2001 and February 13, 2002, SOSANGELIS and KNOX were convicted
of Title 18, U.S.C. ß 2320 ñ Trafficking in Counterfeit Goods.
On October 31, 2002, SOSANGELIS was sentenced to pay restitution in
the amount of $76,728.40.00 and placed on supervised release for three
(3) years.
On January 24, 2003, KNOX was sentenced to eighteen (18) months incarceration
and ordered him to pay restitution in the amount of $26,726.40. KNOX
was placed on supervised release for two (2) years.
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