WOODINVILLE COUPLE AND COMPANY INDICTED FOR SALES OF STOLEN AND MISLABELED MEDICAL DEVICES
PHU NGUYEN, 45, and TUYET NGUYEN, 43, both of Woodinville, Washington and their company, COLUMBIA MEDICAL SYSTEMS (CMS), were indicted by a Federal Grand Jury in Seattle in a 17 count indictment alleging the couple and their company, CMS, Conspired to Transport Stolen Property in Interstate Commerce, Introduced Misbranded Medical Devices into Interstate Commerce, Offered Misbranded Medical Devices for Sale, and Conspired to Engage in Money Laundering. Both Nguyens entered pleas of "Not Guilty" when they were arraigned in U.S. District Court in Seattle today. The company, CMS, and a fourth defendant, SESS MERKE will be arraigned next week. CMS was charged in all 17 counts of the Indictment. SESS MERKE was charged only in Count 1, that is the Conspiracy to Transport Stolen Property in Interstate Commerce. Trial is set for October 3, 2005 at 9:00 a.m. before Judge Robert S. Lasnik.
The investigation began in September 2000, when Bothell medical equipment manufacturer Philips Medical Systems contacted the Bothell Police Department. Philips, and a company it acquired in 1998, Advance Technologies Laboratories (ATL), design and manufacture ultrasound equipment. An internal investigation had uncovered the theft of ultrasound probes manufactured by ATL/Philips. In May of 2003, the Bothell Police Department contacted the Food and Drug Administration for assistance with the investigation.
According to the indictment, both PHU NGUYEN and TUYET NGUYEN had worked for ATL/Philips for more than 14 years when they left in 1998 to form CMS, a company that sells used medical equipment. SESS MERKE had worked at ATL/Philips ten years before leaving the company in September 2000. According to the indictment, CMS, through the actions of the NGUYENs, recruited ATL/Philips employees, including MERKE, to steal ultrasound probes that CMS later sold to clinics and hospitals across the country. CMS would change the serial number labels on the equipment before shipping it to the purchaser, sometimes using a serial number label from an obsolete or broken piece of equipment. Later, CMS and the NGUYENs replaced the internally recorded serial number on probes by replacing a computer chip inside the devices. Changing these identifying numbers made it very difficult to track the history of the medical device.
The indictment alleges that on 112 different occasions the NGUYENs prepared CMS checks payable to cash, ranging in amounts from $3,000 to approximately $4,900, and converted those checks to currency to pay certain co-conspirators, including then ATL/Philips' employee MERKE, for the stolen probes. CMS then sold the probes to hospitals and clinics, often for more than $8,000 each. The 112 cash payments for the stolen probes totaled more than $512,000.
If convicted, PHU and TUYET NGUYEN each face up to five years in prison and a criminal fine of $250,000 on the charge of Conspiracy to Transport Stolen Property in Interstate Commerce; up to ten years in prison and a criminal fine of $250,000 on each of the four counts of Interstate Transportation of Stolen Property; three years in prison and a criminal fine of $10,000 for each of the six counts of Introduction into Interstate Commerce of Misbranded Medical Devices, and on each of the five counts of Holding for Sale Misbranded Medical Devices; and up to twenty years in prison and a criminal fine of $500,000 on the charge of Conspiracy to Engage in Money Laundering. If convicted, CMS faces up to five years of probation and criminal fines in excess of $500,000.
An indictment contains allegations that have not yet been proven in court beyond a reasonable doubt.
The case is being investigated by the Food and Drug Administration (FDA) and the Bothell Police Department. Assistant United States Attorney Susan Loitz is prosecuting the case.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney's Office, Western District of Washington, at (206) 553-4110.