News and Press Releases

News and Press Releases

'Last Place on Earth' owner and employees indicted for alleged violations of federal drug laws

FOR IMMEDIATE RELEASE
December 18, 2012


MINNEAPOLIS—Today in federal court in Duluth, the owner and several employees of the ‘Last Place on Earth’ (“LPOE”), a store in downtown Duluth, were charged in a 54-count indictment alleging they committed, among other offenses, violations of the Federal Food, Drug, and Cosmetic Act (“FDCA”), the Controlled Substances Act (“CSA”), and the Controlled Substances Analogue Enforcement Act (“CSAEA”). James Robert Carlson, age 55, and Lava Marie Haugen, age 32, both of Superior, Wisconsin, as well as Joseph James Gellerman, age 34, and Jamie Paul Anderson, age 24, both of Duluth, were charged with numerous crimes, including conspiracy to commit violations of the FDCA and conspiracy to distribute controlled substance analogues. The indictment, which was filed under seal earlier this month, was unsealed today, after the defendants made their initial appearances in federal court.   

Responding to the indictment, Duluth Police Chief Gordon Ramsey said, “I am confident this indictment is a major step in reducing the supply of dangerous, designer drugs to the region. Our community, including families of those impacted by these drugs, as well as businesses in the eastern downtown area, can breathe a little easier today.”

The indictment states that between March 2010 and September 2012, Carlson, Haugen, Gellerman, and Anderson conspired to obtain and sell through LPOE items misbranded as incense, potpourri, bath salts, exotic skin treatments, glass cleaner, watch cleaner, or novelties. The items, purportedly marketed under names such as “No Name,” “Smoking Dragon,” “Role-X Watch Cleaner,” and “Binger,” among others, were, in actuality, “drugs,” as defined by federal law, and, thus, subject to regulation pursuant to the Federal Food and Drug Administration (“FDA”). The indictment alleges that despite false labeling, the items were meant for human consumption, the purpose being to affect bodily function.

The defendants allegedly intended to mislead government authorities with the false labels, which, in addition to suggesting that the products were not drugs, failed to describe package contents accurately, failed to include health warnings regarding use, and failed to identify the manufacturer or distributor of the items. The indictment also states that from March 16, 2010, through September 29, 2012, Carlson and his co-conspirators knowingly caused the introduction of at least 510 packages of misbranded drugs into interstate commerce by ordering them from suppliers in California, Arizona, Wisconsin, Florida, and Pennsylvania, who were paid close to $2 million in exchange for shipping the goods to the LPOE in Duluth.

Among the various charges levied against the defendants, prosecutors alleged violation of the Controlled Substances Analogue Enforcement Act. Congress passed that act in 1986 to prevent drug dealers, underground chemists, and others from evading federal drug laws by manufacturing and distributing substances with molecular structures only slightly modified from those of a controlled substance. The CSAEA criminalizes drugs that have chemical structures similar to a controlled substance if they have similar effects or are represented by their purveyors as having similar effects.

In addition to the charges already noted, Carlson was charged with two counts of distribution of a controlled substance, one count of possession with the intent to distribute a controlled substance, and 25 counts of engaging in monetary transactions in property derived from a specified unlawful activity.        

If convicted, the defendants in this case face a potential maximum penalty of five years in federal prison for conspiracy to commit offenses against the United States, three years for violating the FDCA, and 20 years for each count of violating the Controlled Substances Act or the CSAEA. In addition, Carlson faces a potential maximum penalty of ten years in prison for each count of engaging in monetary transactions in property derived from a specified unlawful activity.

This case is the result of an investigation by the Duluth Police Department, the Lake Superior Drug and Violent Crime Task Force, the U.S. Food and Drug Administration-Office of Criminal Investigations, the U.S. Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation Division.  It is being prosecuted by Assistant U.S. Attorneys Surya Saxena and Nate Petterson.

An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial.

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