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NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI


BRADLEY J. SCHLOZMAN



Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.usdoj.gov/usao/mow/index.html



JANUARY 25, 2007

FOR IMMEDIATE RELEASE


PENNSYLVANIA MAN PLEADS GUILTY TO

PHARMACEUTICAL DRUG FRAUD


            KANSAS CITY, Mo. – Bradley J. Schlozman, United States Attorney for the Western District of Missouri, announced that a Pennsylvania man pleaded guilty in federal court today to defrauding the government by buying and selling pharmaceutical drugs without the required documentation.


            Frank Anthony Ianeillo, 62, of Stillwater, Penn., pleaded guilty before U.S. District Judge Ortrie D. Smith this morning to the charge contained in a Dec. 14, 2005, superseding indictment.


            By pleading guilty today, Ianeillo admitted that he participated in a scheme to defraud the U.S. Food and Drug Administration by obstructing the lawful functions of the FDA to regulate the interstate sale and distribution of drugs and to safeguard the health and safety of consumers who purchase drugs. Ianeillo, a salesman involved in the secondary wholesale market, made no effort to determine or verify the legitimacy, source and origin of the drugs he purchased and then resold in furtherance of the conspiracy to defraud the FDA. Ianeillo also admitted that at the times he sold drugs, he did not provide his buyer with any paperwork or other documentation to establish the legitimate source, origin, and bona fide nature of the drugs sold.


            Under federal statutes, Ianeillo could be subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.


            Ianeillo is the sixth co-defendant to plead guilty to charges contained in the federal indictment.


            * Noah Salcedo-Smith, 35, of San Fernando, Calif., pleaded guilty on Dec. 28, 2006, to defrauding the government by arranging for the purchase of stolen pharmaceutical drugs. Salcedo-Smith was a salesman involved in the secondary wholesale market. While acting on behalf of Albers Medical Distributors, Inc., and OTS Sales, Inc., Salcedo-Smith arranged for the purchase of prescription drugs from a seller who provided no pedigree documents establishing the legitimacy, source and origin of the drugs being sold. Those drugs, which were manufactured by Glaxo-Smith, had been stolen from a warehouse in Miami, Fla., in December 2001. The stolen drugs were purchased by co-defendant Albert David Nassar, 51, of New York, N.Y., then sold and re-sold through a series of secondary wholesale distributors, including Salcedo-Smith. In a series of purchases in January 2002, co-defendant Douglas C. Albers , 55, of Leawood, Kan., owner of Albers Medical Distributors, paid approximately $3.3 million for some of the stolen Glaxo drugs. Albers then re-sold the drugs to other distributors for approximately $3.5 million.


            Salcedo-Smith also admitted that he helped create false pedigrees for the drugs, so that they could be resold in the secondary wholesale market by Albers Medical Distributors and appear to have a legitimate pedigree.


            * Richard K. Rounsborg, 48, of Kearney, Neb., pleaded guilty on Nov. 30, 2006, to participating in a conspiracy to sell counterfeit, misbranded, and illegally imported drugs from February 2002 until at least April 2003, and to defraud the United States by impeding the lawful functions of the U.S. Food and Drug Administration.. Rounsborg owned and operated Med-Pro, Inc., a privately held corporation located in Lexington, Neb. Med-Pro was engaged in the business of repackaging pharmaceuticals.


            Rounsborg admitted three specific instances in which Med-Pro received misbranded Lipitor or Bextra for repackaging. Rounsborg acknowledged that the circumstances of his conduct constitute willful blindness with regard to a series of Lipitor and Bextra shipments received at Med-Pro for repackaging. Rounsborg’s willful blindness and actions as the control person for Med-Pro constitute conduct in furtherance of the conspiracy.


            Members of the conspiracy purchased Lipitor that was intended for distribution in South America and smuggled it into the United States. Because the cost of purchasing Lipitor intended for distribution outside the United States is lower, Schlozman explained, members of the conspiracy were able to sell the drugs for a lower price.


            * Albert David Nassar, 51, of New York, N.Y., pleaded guilty on Nov. 30, 2006, to participating in a conspiracy to sell stolen pharmaceutical drugs from December 2001 to April 2003, and to defraud the United States by impeding the lawful functions of the U.S. Food and Drug Administration. Nassar was co-owner of Worldwide Pharmaceuticals, a firm that bought and sold pharmaceutical drugs in the secondary wholesale market.


            Nassar admitted that he helped co-conspirators traffic in the illegal distribution of the stolen Glaxo-Smith drugs. Despite warning signs and circumstances known to him at the time, which suggested there was a high probability that the drugs were stolen, Nassar deliberately avoided taking any actions to confirm or deny his suspicion that the prescription drugs were stolen.


            * Michael Allyn Carlow, 54, of Fort Lauderdale, Fla., pleaded guilty on Nov. 3, 2006, to the charge contained in a Dec. 14, 2005, superseding indictment. Carlow also pleaded guilty to related wire fraud charges filed against him the Middle District of Tennessee. Carlow owned and operated G&K Pharma, a company that was used to buy and sell pharmaceutical drugs in the secondary wholesale market.


            Carlow admitted that he knowingly participated in a scheme to distribute Lipitor that he knew was not manufactured by Pfizer for distribution in the United States, and that he helped other members of the conspiracy traffic in pharmaceuticals that all of them knew were not manufactured for distribution in the United States. During the 11-month time period from May 8, 2002, to April 4, 2003, Albers paid G & K Pharma more than $42 million to purchase counterfeit, misbranded and illegally imported drugs from Carlow.


            * Albers pleaded guilty on Oct. 18, 2006, to selling counterfeit and misbranded drugs. Albers agreed to pay a $500,000 civil forfeiture and to surrender his pharmacy licenses in Missouri and Kansas. Albers admitted that he sold counterfeit and misbranded Neupogen to a California firm in September 2001, despite warnings and notices from the Food and Drug Administration and his own knowledge of counterfeit Neupogen that earlier had been purchased and distributed by his firm. Neupogen is an injectable human growth hormone used to decrease the incidence of infections in persons with lowered immune systems, such as cancer and AIDS patients.


            Although Albers specifically pleaded guilty to one count each of selling counterfeit Neupogen and misbranded Neupogen, Schlozman explained, federal prosecutors will argue that all of the conduct charged in the dismissed counts of the superseding indictment as well as any other uncharged related criminal activity should be considered relevant conduct for the purpose of determining an appropriate prison sentence and restitution order.


            * Alexander Nassar, 43, of Miami, Fla., pleaded guilty on Aug. 28, 2006, to his role in the conspiracy. Nassar , also co-owner of Worldwide Pharmaceuticals, admitted that he participated in a scheme to distribute Lipitor that he knew was not manufactured for distribution in the United States.


            Alexander Nassar also admitted that he participated in a conspiracy to buy, sell and traffic in stolen drugs from December 2001 to April 2003. Conspirators purchased and sold among themselves drugs that they knew were stolen. They created false pedigrees to conceal the fact that the drugs were stolen, and they sold the stolen drugs in interstate commerce, knowing that consumers ultimately would purchase the stolen drugs.


            This case is being prosecuted by Senior Litigation Counsel Gene Porter. It was investigated by the Office of Criminal Investigations, U.S. Food and Drug Administration.


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This news release, as well as additional information about the office of the United States Attorney for the Western District of Missouri, is available on-line at

www.usdoj.gov/usao/mow/index.html