Operator Of Online Drug Company That Sold Misbranded Drugs Pleads Guilty To Failing To Pay Taxes
Lion Nutrition Attempted to Hide from IRS Income from Drugs Sold for Bodybuilding Enhancements Which Were Not Approved for Human Consumption
Baltimore, Maryland – David Kirkham, age 41, of Germantown, Maryland admitted today to evading $280,541 in taxes for years 2003 through 2006 on income earned from the online sale of misbranded drugs.
The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office and Special Agent in Charge Antoinette V. Henry, FDA’s Office of Criminal Investigations.
“There are negative consequences for those that don't comply with our nation's laws, and today’s plea is an example of that,” said Special Agent in Charge Thomas J. Kelly, IRS - Criminal Investigation, Washington, D.C. Field Office. “IRS Criminal Investigation will work with our law enforcement partners to bring to justice those that defraud the government.”
“The FDA is committed to fulfilling its mandate of protecting and promoting the public health by ensuring that individuals and businesses operate within the confines of the law,” said Special Agent in Charge Antoinette V. Henry, FDA’s Office of Criminal Investigations. “The FDA applauds the hard work of the Department of Justice and our law enforcement partners in bringing about this successful result.”
According to his plea agreement, Kirkham operated an internet-based business called Lion Nutrition which sold drugs, purchased from China, which he knew would be taken by humans orally or through injection as bodybuilding and performance enhancing supplements. Kirkham knew that these drugs were misbranded and unapproved by the FDA on for human consumption. Kirkham also owned a similar entity which he purchased in early 2006, called Solid Muscle.
Kirkham failed to timely file his 2003, 2005 and 2006 tax returns. These tax returns were filed between July 30, 2008 and August 14, 2008, after Kirkham was notified of the current investigation into his conduct. Kirkham filed a timely 2004 tax return, but this tax return failed to report approximately $125,000 in income he received during the calendar year. On July 28, 2008, Kirkham filed an amended tax return for 2004 which reported the previously undisclosed income.
Kirkham failed to accurately report his income to the IRS in 2006, evading his income taxes in numerous ways. For example, Kirkham failed to issue employees of Lion Nutrition any W-2 forms or 1099, pay withholding taxes to the IRS for employees, or pay all estimated quarterly tax payments.
Kirkham also used his brother-in-law to withdraw funds from bank accounts and wire the funds to drug suppliers in China, used a straw purchaser as a nominee for two real estate properties Kirkham purchased and used a nominee to conceal his ownership of Solid Muscle.
Kirkham owes a total of $280,541 for the tax years 2003 through 2006. As part of his plea agreement, Kirkham will be required to pay restitution to the IRS in that amount.
Kirkham faces a maximum sentence of five years in prison and a $100,000 fine. U.S. District Judge J. Frederick Motz has scheduled sentencing for June 21, 2013 at 10:00 a.m.
United States Attorney Rod J. Rosenstein praised the IRS Criminal Investigation for its work in the tax case and the FDA Office of Criminal Investigations for their investigation into the misbranded drugs. Mr. Rosenstein thanked Assistant U.S. Attorney David I. Sharfstein, who is prosecuting the case.