TWO CONVICTED IN CONNECTION WITH SALE OF STOLEN MEDICAL DEVICES
Former Employees made more than $1,000,000 Selling Stolen Ultrasound Probes
TUYET NGUYEN, 44, of Woodinville, Washington, and SESS MERKE, 38, formerly of Everett, Washington, were convicted by a jury in Seattle April 5, 2006, on charges related to dealing in stolen medical devices. Both TUYET NGUYEN and SESS MERKE were found guilty of one count of Conspiracy to Transport Stolen Medical Devices in Interstate Commerce. In addition, TUYET NGUYEN was found guilty of two counts of Interstate Transportation of Medical Devices, three counts of Transporting in Interstate Commerce Misbranded Medical Devices and one count of Conspiracy to Launder Money. TUYET NGUYEN’s husband, Phu Nguyen, and their company, Columbia Medical Systems (CMS) of Lynnwood, Washington, were also charged in the case. However, the attorney for Phu Nguyen and CMS became ill during trial, resulting in a mistrial as to those defendants. A new trial date will be scheduled for those defendants.
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 transducers manufactured by Philips. In May of 2003, the Bothell Police Department contacted the Food and Drug Administration for assistance with the investigation. In 2005, the Internal Revenue Service - Criminal Investigation was brought into the investigation to help “follow the money.”
TUYET NGUYEN and her husband, Phu Nguyen had worked for Philips for more than 14 years when they left in 1998 to form Columbia Medical Systems, Inc. (“CMS”), a company that sells used medical equipment. SESS MERKE had worked at Philips ten years before leaving the company in September 2000. For the last several years of his employment, MERKE was an inventory manager in charge of several stockrooms of ultrasound equipment. The testimony and documents at trial showed that MERKE filled out false inventory paperwork relating to many ultrasound transducers that were soon thereafter sold by CMS with a different serial number. The testimony at trial included that of another former Philips employee who said he was also recruited to steal ultrasound transducers and sell them to CMS, with the understanding that the serial numbers on the transducers would be changed to keep the theft from being uncovered. Changing these identifying numbers made it very difficult to track the history of the transducers.
The exhibits at trial included 112 CMS checks payable to cash, but referencing the purchase of equipment from MERKE. These checks ranged in amounts from $3,000 to approximately $4,900. CMS then sold the transducers to hospitals and clinics, often for more than $8,000 each. The 112 cash payments for the stolen transducers totaled more than $512,000. There were additional checks to cash indicating payment for equipment purchases, though not identifying MERKE as the source.
TUYET NGUYEN and SESS MERKE 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. TUYET NGUYEN faces up to ten years in prison and a criminal fine of $250,000 on each of the two counts of Interstate Transportation of Stolen Property; three years in prison and a criminal fine of $10,000 for each of the three counts of Introduction into Interstate Commerce of 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.
A second trial date will be scheduled for both TUYET and PHU NGUYEN relative to alleged federal income tax violations that were charged in a superseding indictment in October of 2005. These alleged violations pertain to both their personal tax returns (Forms 1040) and the corporate tax returns (Forms 1120) of CMS for the 2001 and 2002 calendar years.
In addition, a new trial date will be set for the pending charges against Phu Nguyen and CMS for Conspiracy to Transport Stolen Medical Devices, Conspiracy to Launder Money, Interstate Transportation of Stolen Medical Devices, and the allegations relating to Misbranding of Medical Devices.
The case was investigated by the Food and Drug Administration (FDA), the Internal Revenue Service - Criminal Investigation and the Bothell Police Department. Assistant United States Attorneys Susan Loitz and Robert Westinghouse prosecuted 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.