| Addressees,
The following information relates to the third installment for 2004.
These OCI cases have received convictions or related judicial action.
The information is considered unrestricted.
Chicago Field Office
Sentencing/Convictions
This investigation was initiated upon a referral from the United States
Attorney's Office, Chicago, IL, involving U.S. ENDO, INC., owned by
Jonel MANCIU. The referral involved the manufacturing and selling
of unapproved medical devices. The unapproved medical devices that
U.S. ENDO had been manufacturing and selling were monopolar electrodes.
The monopolar electrodes were purchased by VITAL CONCEPTS, INC., with
the knowledge that they were misbranded. According to the referral
and information developed, U.S. ENDO is a defendant in an ongoing
civil suit brought by New Eder, Inc., a manufacturer and distributor
of FDA-cleared monopolar electrodes.
Federal search warrants were executed at U.S. ENDO’S manufacturing
facility and business office and VITAL CONCEPTS’, INC. manufacturing,
warehouse, and distribution facility and business office. During these
searches, monopolar electrodes, raw materials used in the manufacturing
of monopolar electrodes, business records, and other items associated
with the manufacturing and sale of monopolar electrodes were seized.
On January 27, 2003, VITAL CONCEPTS was convicted of violating Title
21, U. S. C. § 331(a) and 333(a)(2) – Introduction into
Interstate Commerce with Intent to Defraud and Mislead Misbranded
Medical Devices. On January 28, 2003, VITAL CONCEPTS was sentenced
to thirty (30) months probation and fined $150,000. Prior to sentencing,
VITAL CONCEPTS had paid restitution of $148,600 to the victims.
On September 18, 2003, MANCIU was convicted of violating Title 21,
U. S. C. § 331(a) and 333(a) (2) – Introduction into Interstate
Commerce with Intent to Defraud and Mislead Misbranded Medical Devices.
On May 10, 2004, MANCIU was sentenced to three (3) years probation,
and fined $ 5,000.
On October 10, 2003, U.S. ENDO, INC. was convicted of violating Title
21, U. S. C. § 331(a) and 333(a)(2) – Introduction into
Interstate Commerce with Intent to Defraud and Mislead Misbranded
Medical Devices. On May 10, 2004, U.S. ENDO, INC., represented by
its owner MANCIU, was fined $ 75,000.
Kansas City Field Office
Sentencing/Convictions
This case was initiated based on information regarding the suspected
tampering of vials of Demerol and morphine sulfate at the Evans Army
Community Hospital located at Ft. Carson Army Base in Colorado Springs,
CO.
On April 8, 2003, Ivan SEGURA, a civilian nurse employed at the hospital,
was indicted by the federal grand jury in the District of Colorado
on a fifty-two (52) count indictment charging violations of Title
18, U.S.C. § 1347- Health Care Fraud; Title 18, U.S.C. §
1365- Tampering with a Consumer Product; and Title 21, U.S.C. §
843- Obtaining Controlled Substances by Deceit and Fraud.
On January 17, 2004, SEGURA was convicted of Title 18, U.S.C. §
1365 – Tampering with a Consumer Product.
On August 17, 2004, SEGURA was sentenced to sixty (60) months incarceration.
Upon his release from prison, SEGURA will be placed under supervisory
probation for a period of thirty-six (36) months. SEGURA was also
ordered to make restitution in the amount of $9,000.
Kansas City Field Office
Sentencing/Convictions
This case was initiated based on several consumer complaints alleging
they had received injections to treat wrinkles from Mariela CARATTINI.
The injection sites became hard, in some cases infected, and all had
to be removed by a physician.
An undercover officer visited CARATTINI in her apartment. CARATTINI
indicated the officer needed to be treated with BIO-POLIMER for her
wrinkles. The cost would be $100 per injection. BIO-POLIMER is a silicone
based substance not approved for medical use in the United States.
On a second visit the officer was to receive five injections. Just
prior to the injections, CARATTINI was arrested for practicing medicine
without a license. A search warrant was executed. Several small and
large tubes of a thick clear unknown substance were seized, along
with numerous needles.
On August 17, 2004, CARATTINI was convicted of state felony assault
charges. She was fined $300 and ordered to pay $700 restitution to
a former victim.
This case was worked jointly between the Office of Criminal Investigations
and the Houston Police Department, Major Offenders Unit.
Los Angeles Field Office
Sentencing/Convictions
This case was initiated on information received from the United States
Postal Inspection Service (USPIS), Rocky Mountain Division, Phoenix,
AZ. USPIS provided information that postal employees, during their
normal course of duties, discovered a damaged box containing various
misbranded pharmaceuticals some of which were labeled, in part, “Butalbital.”
According to USPIS, the shipment of prescription drugs was mailed
from FARMACIA CARIMAS, Levittown Toa Baja, Puerto Rico, to Lourdes
GONZALEZ in Tempe, AZ.
On May 20, 2003, GONZALEZ was interviewed by USPIS. GONZALEZ stated
that she was an employee of FARMACIA CARIMAS, and as an employee,
she had the authority to possess the prescription drugs. GONZALEZ
also related that in the past, she received boxes through the mail,
broke down the boxes into smaller shipments, and mailed them to brokers
in Nogales, AZ, and Calexico, CA. The brokers delivered the prescription
drugs to customers across the border in Mexico. USPIS notified the
Office of Criminal Investigations (OCI), Phoenix Resident Office that
they did not elect to pursue this investigation any further.
On May 20, 2003, the State of Arizona, Board of Pharmacy and Board
of Medical Examiners was contacted, to determine if GONZALEZ was a
licensed pharmacist, a prescription drug wholesaler, or physician.
The records inquiry yielded negative results.
On May 21, 2003, GONZALEZ was re-interviewed by OCI. GONZALEZ advised
she did not have a license to distribute/wholesale prescription drugs,
is not a physician with dispensing authority, and is not a licensed
pharmacist in Arizona or any other State or Territory in the United
States. GONZALEZ granted consent to open the two boxes that were mailed
to her from FARMACIA CARIMAS. The boxes contained a total of 500 bottles,
labeled in part “Butalbital, Acetaminophen, and Caffeine Tablets,
USP, 50mg/325mg/40mg tablets”, each bottle containing 100 tablets,
with an approximate retail cost of $100,000.
According to the FDA, Forensic Chemistry Center laboratory analysis,
the samples submitted for examination tested positive for Butalbital,
Acetaminophen, and Caffeine Tablets, USP, 50mg/325mg/40mg, in the
specified amounts.
Record checks revealed FARMACIA CARIMAS is owned by Abdullah A. YASSIN.
FARMACIA CARIMAS is a legitimate licensed pharmacy in Puerto Rico.
On July 1, 2004, GONZALEZ was convicted of a felony by the State of
Arizona, Superior Court, to Arizona Revised Statute (ARS), Title 13,
Section 3407 - Possession, Use, Administration, Acquisition, Sale,
Manufacture, or Transportation of Dangerous Drugs.
On August 5, 2004, GONZALEZ was sentenced to thirty-six (36) months
of supervised probation, 360 hours of community service, and ordered
to pay a fine of $27,000.
Los Angeles Field Office
Sentencing/Convictions
This case was initiated based on information received from the Phoenix,
AZ, Police Department (PPD), Drug Enforcement Bureau (DEB). According
to PPD, Mark FORSTER used the identity, billing information, and Drug
Enforcement Administration (DEA) number of David Hurtado, M.D., to
acquire pharmaceuticals from General Injectables & Vaccines, Inc.
(GIV), and Henry Schein, Inc. FORSTER then sold the fraudulently procured
pharmaceuticals to unknown parties.
In November 2002, Dr. Hurtado, St. Luke’s Medical Center, 525
N. 18th St., Suite 402, Phoenix, AZ, contacted PPD because one of
his employees observed a delivery notice for prescription drugs taped
to the door of Suite #305, located in the same medical center as his
office. According to Dr. Hurtado and St. Luke’s Medical Center,
Suite #305 is vacant. Dr. Hurtado contacted the pharmaceutical company,
GIV, which advised him an additional order for pharmaceuticals was
ordered and scheduled to be delivered to Suite #305, under the name
of Richard Aguilar. Dr. Hurtado contacted PPD in reference to someone
ordering pharmaceuticals using his identity and DEA number without
his authorization. PPD contacted GIV and set up a controlled delivery.
In November 2002, surveillance was conducted at St. Luke’s Medical
Center, Suite #305. An individual, later identified as FORSTER, also
known as Richard Aguilar, was loitering in the vicinity of Suite #305.
FORSTER was observed removing a note from the door of Suite #305 and
departing the medical center.
PPD and the Office of Criminal Investigations (OCI) executed a search
warrant at FORSTER’s residence. Pursuant to the search warrant,
financial documents, a notebook computer, and personal-use misbranded
prescription drugs were discovered and seized as evidence.
During the course of this investigation, PPD and OCI established that
FORSTER, utilizing Dr. Hurtado’s identity, had ordered approximately
$100,000 worth of pharmaceuticals and sold them to prescription drug
wholesalers.
On July 13, 2004, FORSTER was convicted of violating Arizona State
felony statues, specifically, Title 13, § 2310 - Attempted Fraudulent
Schemes and Artifices; and Title 13, § 2008 -Taking the Identity
of Another.
On August 27, 2004, FORSTER was sentenced thirty-six (36) months incarceration
and ordered to pay restitution to all victims in an amount not to
exceed $200,000.
Los Angeles Field Office
Sentencing/Convictions
This case was initiated based on information received from the Federal
Bureau of Investigation (FBI) concerning the promotion and use of
Neuralyn by Thomas Michael VIGIL, and his wife, Beverly VIGIL. Tom
and Beverly VIGIL owned and operated THE ALTERNATIVE MEDICINE AND
BIOPHYSICS RESEARCH INSTITUTE, INC. (AMBRI), Nampa, ID, and promoted
Neuralyn on their web site at www.neuralyn.com. More than 150 patients,
most of them paraplegics or quadriplegics, paid up to $10,000 each
to come to Nampa, ID, or affiliated clinics in Utah and Colorado,
to be treated with Neuralyn.
Prospective patients were told that Neuralyn was 85 to 95 per cent
successful and could enable them to move or even walk again by re-generating
nerve cells. The patients were also fraudulently told that VIGIL was
a medical doctor with training in biochemistry, that Neuralyn had
undergone clinical studies, and that a patent application and FDA
approval were pending.
Neuralyn was promoted as an all-natural substance made from plants
from the Yucatan, but it actually contained a topical anesthetic that
gave some patients temporary pain relief and led them to believe they
were improving. Tom and Beverly VIGIL charged $300 to $500 for a vial
of Neuralyn for home treatment, claiming that the ingredients, production
process, and costs of research and patent applications justified the
high price. Both admitted, however, that the vials of Neuralyn cost
them only $15 each.
After patients received the initial treatment in Idaho or at affiliated
clinics, the Neuralyn was ordered from David TAYLOR, a pharmacist
in Costa Mesa, CA, who operated the D.T. HOLISTIC PHARMACEUTICAL COMPANY.
On June 23, 2000, the Office of Criminal Investigations and the FBI
executed four (4) federal search warrants in California, Idaho and
Utah. Seized were extensive documents and physical evidence supporting
the production and sales of Neuralyn.
On December 13, 2001, TAYLOR was convicted of violating Title 18,
U.S.C, § 371 – Conspiracy to Deliver for Introduction into
Interstate Commerce a Misbranded Drug.
On January 9, 2002, a Federal Grand Jury, District of Idaho, returned
a twenty-eight (28) count indictment charging Tom and Beverly VIGIL
with one (1) count of conspiracy to commit wire fraud in violation
of Title 18, U.S.C., §§ 371 and 1343; eighteen (18) counts
of wire fraud, and aiding and abetting wire fraud, in violation of
Title 18, U.S.C., §§ 1343 and 2; one (1) count of conspiracy
to deliver for introduction into interstate commerce, knowingly and
with intent to defraud, a misbranded drug, in violation of Title 18,
U.S.C., § 371; and eight (8) counts of delivering for introduction
into interstate commerce, knowingly and with intent to defraud, a
misbranded drug, and aiding and abetting the commission of that offense,
in violation of Title 21, U.S.C., §§ 331(a), 333(a)(2) and
Title 18, U.S.C, § 2.
On January 15, 2002, Beverly VIGIL was arrested on an outstanding
warrant issued relative to the above indictment. During the arrest
of Beverly VIGIL, information was developed that her husband, Thomas
VIGIL, had fled to Mexico.
On September 24, 2002, Beverly VIGIL was convicted of two (2) counts
of conspiracy as charged in the indictment.
On October 16, 2002, TAYLOR was sentenced to five (5) years probation,
ordered to pay $39,907 in restitution, and fined $5,000.
On June 16, 2003, Beverly VIGIL was sentenced to thirty-three (33)
months incarceration; three (3) years supervised probation, and ordered
to pay $795,396 in restitution to the victims of her scam.
On October 11, 2003, Thomas VIGIL was arrested by the Department of
Homeland Security at the San Ysidro, CA, Port of Entry on an outstanding
warrant issued relative to the above indictment. Thomas VIGIL was
attempting to enter the United States from Mexico.
On March 25, 2004, Thomas VIGIL was convicted of all counts as charged
in the indictment.
On August 24, 2004, Thomas VIGIL was sentenced to fifty-one (51) months
incarceration, which represented the high end of the federal sentencing
guidelines, three (3) years supervised probation, and ordered to pay
$810,541 in restitution to the victims of his scam. During the sentencing,
Judge Winmill commented that this was the most egregious case of fraud
he had seen in his seventeen years on the bench.
Metro Washington Field Office
Sentencing/Convictions
This investigation was initiated based on information and evidence
obtained from the Office of Criminal Investigations, New York Field
Office. Information developed and provided indicated that FPP DISTRIBUTION,
INC. of Cincinnati, Ohio sold prescription drugs with counterfeit
labels and inserts. The sales were made to two (2) pharmacies in the
New York City area.
RxBAZAAR, INC. is a publicly traded corporation located in Forest
Park, Ohio. RxBAZAAR is a wholesale distributor of prescription drugs
and other products online. Superior Pharmaceutical is a trade name
through which RxBAZAAR acts as a distributor of brand prescription
drugs and other products. FPP DISTRIBUTION is a corporation that since
February 2001 has been a wholly-owned subsidiary of RxBAZAAR. All
three companies are located in Cincinnati, Ohio. From about 2000 to
the present, FPP DISTRIBUTION has acted as the fulfillment center
for RxBAZAAR and Superior Pharmaceutical. FPP DISTRIBUTION receives
and distributes brand prescription drugs and other products to retail
pharmacies and other wholesale distributors.
RxBAZAAR and FPP Distribution are licensed by the State of Ohio to
act as wholesale distributors of brand prescription drugs.
RxBAZAAR and FPP DISTRIBUTION are not drug manufacturers or authorized
distributors of record for brand name prescription drugs.
While investigating information regarding counterfeit drugs that were
sent to pharmacies in New York, the Office of Criminal Investigations
(OCI) was subsequently notified about several unrelated incidents
involving the sale and distribution of counterfeit or otherwise misbranded
or adulterated units of Zyprexa by RxBAZAAR. Pharmacy customers of
RxBAZAAR/FPP had reported numerous incidents in which the strength
of Zyprexa tablets in the bottles differed from the label, indicating
illegal repackaging had occurred.
As part of the investigation of the Zyprexa complaints, OCI requested
pedigree information to determine where FPP had purchased the drugs.
During the investigation it was determined during conversations with
officials of the companies, Robert Cusick and Vanett Marshall, that
the companies had not been providing the statutorily required pedigrees
when they distributed brand prescription drugs to all retail pharmacies
and to some wholesale distributors.
The OCI investigation uncovered that from April 2000 to July 2004,
RxBAZAAR and Superior Pharmaceutical obtained pedigrees for some sellers
of brand prescription drugs, but in many cases did not obtain the
pedigrees. RxBAZAAR’s website stated that sellers were required
to provide an identifying statement, that is, a pedigree, but RxBAZAAR
did not enforce the requirement. Neither RxBAZAAR nor Superior Pharmaceutical
provided the required pedigree for brand prescription drugs distributed
by them to retail pharmacies and other wholesale distributors. FPP
DISTRIBUTION, which distributed drugs for both companies, did not
provide the required pedigree for brand prescription drugs distributed
by them to retail pharmacies and other wholesale distributors.
The companies asserted that as a result of misleading reports in the
trade press about the FDA’s decision to postpone the regulations
relating to the pedigree, the companies believed the pedigree requirement
was not in effect. The United States Attorney’s Office (USAO)
disagreed and advised the companies that ignorance of the law or a
mistake of law is not a defense to a strict liability crime. The USAO
advised the companies that the statute requires the pedigree to be
provided even though FDA regulations have not become effective.
On August 27, 2004, wholesale drug distributors RxBAZAAR, INC. and
FPP DISTRIBUTION, INC., were convicted for failing to comply with
Title 21, U.S.C. §353(e)(1)(A), and Title 21, U.S.C. § 331(t)-
Failure to Provide a Statement (Pedigree) Identifying each Prior Sale,
Purchase, or Trade of the Drug. RxBAZAAR, INC. and FPP DISTRIBUTION,
INC. issued a statement advising three separate trade publications
that the above-mentioned companies were convicted for the above-mentioned
offense.
RxBAZAAR, INC. and FPP DISTRIBUTION, INC. were each sentenced to serve
a five (5) year period of probation and fined approximately $100,000.
Metro Washington Field Office
Sentencing/Convictions
This investigation was initiated based upon information obtained from
the Southern Ohio Medical Center Pharmacy (SOMC), Portsmouth, OH.
The information revealed that the pharmacy had purchased fifty (50)
vials of the drug Sincalide (Kinevac) from a compounding pharmacy,
TRICARE PHARMACY NETWORK LLC, Lexington, KY, without providing prescriptions
as required by law. The Sincalide had labels bearing fictitious patient
names, fictitious doctors names, and there existed potential sterility
concerns; specifically the product arrived in powder form with instructions
to keep the product frozen (although it was only cool), and sterility
filters were included with instructions to add saline and inject the
solution through the sterile filter.
Additional undercover purchases of prescription and controlled drugs
both commercially available and unavailable were made from TRICARE.
The pharmaceuticals ordered were received bearing fictitious patient
and doctor's names or were invoiced to disguise the drug that was
shipped. Additionally, no prescriptions were ever required by or provided
to TRICARE.
In July, 2004, the Ohio State Board of Pharmacy and TRICARE reached
a settlement in which TRICARE agreed to pay a $4000 fine, receive
a (one) 1 month suspension and are prohibited from compounding and
prescribing in Ohio without patient specific prescriptions. If they
commit another offense there will be a total revocation of their Ohio
pharmacy license.
On August 17, 2004, Gary HARRIS and Darren WHITE, pharmacists at TRICARE,
were convicted of violating Title 21, U.S.C. §§331(k) and
353(b) (1) – Misbranding of a Drug after Receipt in Interstate
Commerce. The two defendants were each fined $1000.
Miami Field Office
Sentencing/Convictions
This case involves the investigation of James HOFFMAN, who was selling
prescription drugs by operating an Internet web site, WWW.PILLSFORYOU.COM.
The investigation of HOFFMAN began in Wilmington, North Carolina,
but was transferred to Pittsburgh, Pennsylvania after Hoffman agreed
to provide information regarding ongoing criminal activity in Pennsylvania.
On February 12, 2003, HOFFMAN was convicted of violating Title 21,
U.S.C. § 841 (d) - Distribution of a Controlled Substance.
On July 13, 2004, HOFFMAN was sentenced to fifteen (15) months incarceration,
followed by three (3) years of supervised release.
Miami Field Office
Sentencing/Convictions
This case involves the investigation of NICHOLS FOOD SERVICE, INC.,
Wallace, North Carolina for causing federally inspected meat and poultry
to become adulterated and misbranded. NICHOLS FOOD SERVICE sold meat
and poultry products to restaurants, rest homes, and schools in the
states of North Carolina and South Carolina. Inspections performed
by the Food and Drug Administration and North Carolina Department
of Agriculture discovered unsanitary conditions including putrid,
moldy and spoiled meat and poultry, rodent excreta pellets and live
roaches in the warehouse.
On March 15, 2004, NICHOLS FOOD SERVICE was convicted of violating
Title 21, U.S.C. § 610 - Causing Federally Inspected Meat (Human
Food) to become Adulterated and Misbranded. NICHOLS FOOD SERVICE also
entered into a Pretrial Diversion Agreement and was convicted of violating
Title 21, U.S.C. § 331(k) - Mislabeling of Food, Causing Adulteration
and Misbranding. The conditions of the Pretrial Diversion Agreement
included: a criminal fine of $35,000 paid over a five (5) year term
of probation; donation of 12,000 pounds of unadulterated meats to
charitable organizations in North Carolina; and establishment of a
quality assurance/quality control program.
On March 14, 2004, James L. NICHOLS, III, owner of NICHOLS FOOD SERVICE,
and Jeff RAND, Vice President of Operations, entered into Pretrial
Diversion Agreements in the Eastern District of North Carolina. NICHOLS
and RAND were convicted of violating Title 21, U.S.C. § 331(k)
- Mislabeling of Food, Causing Adulteration and Misbranding, and Title
21, U.S.C. 610(d) and 676- Adulteration of Meat, Poultry, and Grain
Products. The agreements state their prosecution shall be deferred
for a period of eighteen (18) months provided certain conditions are
met. NICHOLS and RAND were ordered to complete 100 hours of community
service and 80 hours of training to insure the sanitary practices
of his company. NICHOLS was also ordered to pay a $5000 fine. NICHOLS
FOOD SERVICE, et al, was ordered to pay $8,053 in restitution to the
United States Department of Agriculture.
New York Field Office
Sentencing/Convictions
This case was initiated based on information received from the Federal
Bureau of Investigation (FBI), Health Care Fraud Task Force, New Haven,
CT. The FBI reported that Dr. Jorge ELIAS, a pediatrician, Norwalk,
CT, allegedly committed a Prescription Drug Marketing Act violation
by selling and/or billing Medicaid and private insurance companies
for prescription drug samples. Dr. ELIAS also committed health care
fraud by billing Medicaid and private insurance companies for prescription
drug vaccines that he received free of charge from the Vaccines for
Children's (VFC) program administered by the State of Connecticut,
Department of Public Health
From December 2, 2003 to January 14, 2004, the Office of Criminal
Investigations, New York Field Office, the Federal Bureau of Investigation,
Health Care Fraud Task Force, New Haven, CT, and the Department of
Health and Human Services, Office of Inspector General, Hartford,
CT, conducted an investigation which revealed that during the years
1995 to 2003, Dr. ELIAS received 3,000 free prescription drug vaccines
per year from the State of Connecticut, Department of Public Health.
A review of Dr. ELIAS’S patient billing records, provided by
Medicaid and various private insurance companies, indicated that Dr.
ELIAS billed for and was reimbursed for all the free prescription
drug vaccines that he received, and that Medicaid and the private
insurance companies paid Dr. ELIAS approximately $400,000 for these
free vaccines.
On January 14, 2004, a federal search warrant was executed at Dr.
ELIAS’S office. Records and documents seized during the search
documented that Dr. ELIAS did in fact bill for and was reimbursed
for these free vaccines.
Dr. ELIAS was interviewed on January 14, 2004, incident to executing
the search warrant,. During this interview, Dr. ELIAS said he did
not bill his patients, Medicaid, or private insurance companies for
prescription drug samples. However, Dr. ELIAS did admit to billing
Medicaid and private insurance companies for the free vaccines he
received from the VFC program to offset the high cost of operating
his office.
On May 28, 2004, Dr. ELIAS was convicted of violating Title 18, U.S.C.
§ 1347- Health Care Fraud.
On September 21, 2004, Dr. ELIAS was sentenced two (2) years probation,
ordered to pay restitution in the amount of $222,920, and pay a fine
in the amount of $30,000.
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