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Eleventh Circuit Affirms Sentence of Operator of Businesses that Defrauded Spanish-Speaking Individuals, and Peruvian Man Sentenced for Defrauding and Extorting Spanish-Speaking Individuals  
United States v. Maria Luzula, Juan Rodriguez Cuya, Angeluz Florida Corporation and Angeluz Miami, LLC

Press Release
Docket Number: 14-CR-20221 (S.D. Fla.); 15-10032 (11th Circuit)

On January 27, 2015, the U.S. District Judge Patricia Seitz sentenced Juan Alejandro Rodriguez Cuya to 210 months in prison for his role in operating Angeluz Florida Corporation and Peruvian call centers.  

On April 5, 2016, The United States Court of Appeals for the Eleventh Circuit affirmed the 165-month prison sentence that Maria Luzula was ordered to serve in December 2014.  Luzula pled guilty halfway through trial against her for her role operating Angeluz Florida Corporation in Miami and call centers in Peru.  Luzula and Rodriguez Cuya’s operation misled and threatened Spanish-speaking victims into paying fraudulent settlements for nonexistent debts.  By means of internet-based telephone calls from Peru, Rodriguez Cuya’s employees phoned Spanish-speaking victims in the United States and threatened lawsuits, arrest, deportation, and forfeiture of property for refusing delivery of certain products and claimed the victims owed thousands of dollars in fines.  

In reality, the victims had never ordered any products and nothing had been delivered, but the employees claimed that the consumers could resolve the threatened fines if they immediately paid a “settlement fee.” Luzula oversaw a phone room in Miami that collected such fees from thousands of victims who succumbed to these false threats and agreed to pay fees the victims did not owe and could not afford.  Luzula appealed her sentence, challenging the loss amount that was attributed to her and the enhancement for her role as an organizer and leader of the scheme.  The Eleventh Circuit held that the government provided reliable and specific evidence that Luzula’s fraud caused a loss within the range found by the district court and that the court did not err in enhancing Luzula’s sentence for her role as a leader in planning and executing the scheme.  Accordingly, Luzula’s sentence was affirmed.  Learn more.

Business Opportunity Fraudster Sentenced in Houston
United States v. Robert D. King

Docket Number: 4:12-CR-87 (S.D. Tex.)

On July 2, 2014, Robert King, the proprietor of Mark Five, a business opportunity firm in Houston, was sentenced to 63 months of imprisonment after pleading guilty to one count of conspiracy to commit mail and wire fraud. From the mid-1990s through 2010, King offered consumers the opportunity to purchase, at a typical purchase price of $10,000, a business opportunity consisting of jewelry display racks and jewelry. King falsely told prospective purchasers from across the country that the business opportunity was a lucrative venture that would earn substantial profits. King admitted as part of his plea that he paid false references—including three people who also pleaded guilty and have been sentenced—to take reference calls and make misrepresentations to consumers about the potential success they might experience from purchasing a Mark Five business opportunity. King was also ordered to pay restitution in an amount that will be determined by the Court within 90 days.

Jamaican Citizen Sentenced in Connection with a Jamaican Lottery Scam
United States v. Oneike Mickhale Barnett

Press Release
Docket Number: 0:12-CR-60186 (S.D. Fla.)

Oneike Mickhale Barnett, a Jamaican citizen convicted in connection with the operation of a fraudulent lottery, was sentenced on April 29, 2014 to 60 months in prison and 5 years’ supervised release in connection with a lottery scheme based in Jamaica that fraudulently induced elderly victims in the United States to send the conspirators thousands of dollars to cover fees for lottery winnings that victims had not in fact won. Barnett was also ordered to pay restitution to the victims in the amount of $94,456.

Barnett was arrested August 13, 2013 in Orlando, Fla., following his indictment by a federal grand jury in Fort Lauderdale, Fla., on Aug. 9, 2012. Beginning in October 2008, the conspirators contacted victims in the United States, announced that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money. The victims never received cash or prizes. The conspirators made calls from Jamaica using Voice Over Internet Protocol technology that allowed them to use a telephone number with a U.S. area code. Victims sent money to middlemen in South Florida, who forwarded the money to Barnett and others in Jamaica. Barnett pled guilty to conspiracy to commit wire fraud in connection with this conduct.

Two Sentenced for Operating Fraudulent Telemarketing Business Targeting Spanish-Speaking Consumers
United States v. Daniel Carrasco and Federico Martin Gioja

Press Release
Docket Number: 1:13-CR-20542 (S.D. Fla.)

On January 9, 2014, Daniel Carrasco was sentenced to serve 121 months in federal prison, and Federico Martin Gioja was sentenced to serve 108 months in federal prison, for their operation of telemarketing companies in Argentina whose representatives consistently lied to consumers about products they would receive and threatened consumers with consequences of failure to pay for their shipments. Companies belonging to Carrasco and Gioja falsely claimed an affiliation with Univision and purported to sell products such as dietary supplements, lotions, girdles, and English-language training products. However, the companies frequently did not have the products they promised to send to consumers, and so consumers received other products instead. Their companies also promised consumers free gifts such as expensive watches and perfumes, gift cards, and medical insurance, which were not delivered as promised. After consumers refused delivery of the companies’ shipments, employees of Carrasco and Gioja in an Argentinian phone room called and falsely threatened the consumers with arrest, deportation, or fines on their gas and electric bills. The court ordered Carrasco and Gioja to forfeit numerous properties bought with illegal proceeds.

Two Arrested for Operating Loan Modification Scam That Targeted Struggling Homeowners
United States v. Bryan D’Antonio, Charles Wayne Farris, and Ronald Rodis

Press Release
Docket Number: 8:13-CR-208 (C.D. Cal.)

On December 3, 2013, FBI agents arrested Bryan D’Antonio and Charles Wayne Farris for their roles in operating Rodis Law Group and America’s Law Group, bogus law firms which purported to offer struggling homeowners assistance obtaining loan modifications. Attorney Ronald Rodis surrendered to federal agents on charges alleging that he participated in, and lent his name and the law license he formerly possessed to, the fraudulent operation. Farris and Rodis were charged with one count of conspiracy to commit wire fraud and nine counts of wire fraud. D’Antonio was also charged with 13 counts of criminal contempt for violating a 2001 court order which permanently banned him from participating in future telemarketing operations. The government has alleged that D’Antonio and Farris recruited and trained telemarketing staff to answer consumer calls, during which sales staff routinely lied to homeowners about Rodis’ success rates, ability to obtain loan modifications, and, at times, directed homeowners to stop making mortgage payments. Many homeowners lost their homes to foreclosure after hiring the firms. A trial has been set for September 30, 2014 before Judge David O. Carter in Santa Ana, California.

Eleventh Circuit Upholds Conviction of Business Opportunity Fraudster
United States v. Manuel Rodriguez

Press Release
Docket Number (Trial Court): 10:11-CR-60062 (S.D. Fla.)
Docket Number (Federal Appeals Court): 14-10117 (11th Cir.)

On October 16, 2013, the Court of Appeals for the Eleventh Circuit upheld the conviction of Manuel Rodriguez, who was convicted in September 2011 of mail fraud, wire fraud, and conspiracy following a three-week jury trial in Ft. Lauderdale, Florida. Rodriguez operated four different business opportunity frauds from 2005 until 2011, selling purchasers business packages that included coffee vending machines by misrepresenting that they would earn sufficient revenues to pay for their investment within the first 12 to 18 months and receive ample customer support. In reality, Rodriguez provided none of these services, and his customers all lost their money. In its opinion, the appeals court determined that the government presented overwhelming evidence that the scheme was fraudulent and affirmed the conviction. However, the court remanded the case to the district court for re-sentencing on one issue. The defendant was re-sentenced on December 30, 2013. On January 9, 2014, Rodriguez filed an appeal with the Eleventh Circuit from the Amended Judgment.

Three Sentenced in Immigration Fraud Scheme
United States v. Thomas Strawbridge, Thomas Laurence, and Elizabeth Meredith

Press Release
Docket Number: 2:12-CR-4009 (W.D. Mo.)

On August 27, 2013, Thomas Strawbridge was sentenced to serve 82 months in federal prison, Thomas Laurence was sentenced to 130 months in federal prison, and Elizabeth Meredith was sentenced to 12 months in federal prison, for their work in connection with an immigration fraud scheme. The three defendants worked at Immigration Forms and Publications (IFP), a Sedalia, Mo., company that falsely represented to consumers that: (1) IFP was affiliated with the federal government and sales representatives were immigration agents; (2) fees paid to IFP covered government filing fees for immigration documents; and (3) that IFP could speed up application processing. All three defendants pleaded guilty to mail and wire fraud charges in August 2012.

Court Refuses to Dismiss Complaint Against S&P
United States v. McGraw-Hill Cos.

Press Release
Docket Number: 13-CV-779 (C.D. Cal.)

On July 16, 2013, the district court entered an order denying the defendants’ motion to dismiss the United States’ lawsuit against credit rating agency Standard & Poor’s and its parent, McGraw-Hill Companies, which alleges civil FIRREA violations based on mail fraud, wire fraud and financial institution fraud. The court also rejected the remainder of defendants’ arguments, finding that the complaint sufficiently alleged subjective and objective falsity with the requisite particularity, and adequately alleged that defendants acted with specific intent to defraud. The case has now proceeded to pre-trial discovery.

Joint U.S.-Costa Rica Citizen Sentenced to 97 Months Imprisonment in Connection with Costa Rica-Based Business Opportunity Fraud Scheme
United States v. Sean Rosales

Press Release
Docket Number: 1:11-CR-20816 (S.D. Fla.)

On May 20, 2013 Sean Rosales was sentenced to 97 months in prison and five years’ supervised release following his conviction on charges of conspiracy to commit mail and wire fraud. Rosales purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. Between May 2005 and December 2008, the defendant participated in a conspiracy to fraudulently induce purchasers to buy business opportunities through the use of a complicated telemarketing scheme, including use of virtual offices in the U.S. and voice over internet protocol to make it appear to victims in the U.S. that such business were located in the U.S., when in fact the telemarketing rooms were all based in Costa Rica. The business opportunities the defendant and his co-conspirators sold cost thousands of dollars each, and most purchasers paid at least $10,000. In this case, more than 200 individuals were victims of the conspiracy, and the fraud loss was over $7 million.

Retailers Agree to Resolve Allegations Concerning Misidentification of Rayon Products as Being Made from Bamboo
United States v., Inc.; United States v. Leon Max d/b/a Max Studio; United States v. Macy’s, Inc.; United States v. Sears, Roebuck and Co.

Press Release
Docket Numbers: 1:13-CV-02 (Amazon); 1:13-CV-03 (Leon Max); 1:13-CV-04 (Macy’s); 1:13-CV-05 (Sears) (D.D.C.)

In January and April 2013, the United States District Court for the District of Columbia entered consent orders filed by the government to settle civil lawsuits concerning alleged violations of the Textile Fiber Product Identification Act and the Federal Trade Commission (FTC) Act. The complaints alleged that, Max Studio, Macy’s, Sears, Kmart, and advertised and sold textile products as being made from bamboo when they were really made from a manufactured fiber, rayon. Under the consent orders, the companies agreed to take steps to prevent future violations, including distributing the orders to employee managers with responsibility for marketing or sale of textile products, keeping accounting and other records necessary to demonstrate compliance with the order, and reporting relevant data to the FTC. In addition, each company made a monetary payment to the government as follows: Amazon ($455,000); Max Studio ($80,000); Macy’s ($250,000); and Sears ($475,000).

Defendant Remains At Large in Business Opportunity Fraud Indictment
United States v. Paul Hall (dba Vends R Us)

Docket Number: 1:11-CR-255 (S.D. Ala.)

Since his indictment on September 30, 2011 for defrauding consumers in a vending machine scheme, Paul H. Hall, has remained a fugitive. A federal grand jury in the Southern District of Alabama returned an indictment which charged Hall with five counts of wire fraud, one count of mail fraud, and one count of criminal contempt. The indictment states that in 2009-2010 Hall operated a business called “Vends R Us” from his home in Mobile, Alabama. Vends R Us sold a “business opportunity” for approximately $11,200 that was supposed to include ten snack vending machines, good locations for vending machines, and ongoing customer assistance. Vends R Us advertised in newspapers throughout the United States. According to the indictment, Hall misrepresented the profits that purchasers could expect to earn and the availability of locations. The indictment also charges that Hall used a fake name to try to hide his activities. Hall was ordered by a federal judge in 2005 not to be involved in the sale of business opportunities in a civil case previously filed against him by the Department of Justice in connection with earlier vending machine business opportunities Hall sold.

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Endo Pharmaceuticals Agrees to Pay $192.7 Million for Marketing the Prescription Drug Lidoderm for Unapproved Uses
United States v. Endo Health Solutions and Endo Pharmaceuticals, Inc.

Press Release
Docket Number: 1:14-CR-66 (N.D.N.Y.) (Criminal); 05-CV-3450, 10-CV-2039, 11-CV-7767 (E.D.P.A.) (CIVIL)

On February 21, 2014, Endo Pharmaceuticals, Inc. and its parent company, Endo Health Solutions (collectively, “Endo”), agreed to pay $192.7 million to resolve its criminal and civil liability arising from the unlawful marketing of the prescription drugs Lidoderm for uses not approved as safe and effective by the U.S. Food and Drug Administration (“FDA”). The Federal Food, Drug, and Cosmetic Act requires a company to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses until the company receives FDA approval for the new intended uses. Lidoderm is a topical drug that is only FDA-approved for the relief of pain associated with post-herpetic neuralgia (“PHN”), a complication of shingles. During the period of 2002 to 2006, however, Endo marketed Lidoderm for the treatment of non-PHN related pain, including low back pain, diabetic neuropathy and carpal tunnel syndrome, uses which were never approved by the FDA. Endo agreed to a deferred prosecution agreement and to pay a total of $20.8 million in monetary penalties and forfeiture. The resolution also includes civil settlements with the federal government and the states totaling $171.9 million based on false claims stemming from Endo’s promotion of Lidoderm for unapproved uses from 1999 through 2007, some of which were not medically accepted indications and, therefore, were not covered by the federal health care programs.


Certiorari Denied for Former Pharmaceutical CEO Seeking Appeal After Ninth Circuit Affirms His Fraud Conviction
United States v. W. Scott Harkonen

Docket Number: 3:08-cv-164 (N.D. Cal.); 11-10209 (9th Cir.), 11-10242 (9th Cir.); 13-180 (Supreme Court)

On December 16, 2013, the U.S. Supreme Court declined to review the wire fraud conviction of the former chief executive officer of biotechnology company InterMune Inc. W. Scott Harkonen was convicted in 2009 of wire fraud following a seven-week trial. The case stemmed from a 2002 InterMune press release that described the results of a clinical trial that tested InterMune’s drug Actimmune as a treatment for the fatal lung disease of idiopathic pulmonary fibrosis (IPF). Despite the complete failure of the clinical trial, Harkonen falsely portrayed the trial results in the press release as proving that Actimmune helped IPF patients live longer. InterMune’s sales force used the press release with doctors to increase sales of Actimmune. The panel of the Ninth Circuit that heard Harkonen’s original appeal unanimously rejected Harkonen’s claim that his conviction criminalized scientific debate. In an unpublished opinion, the Ninth Circuit panel found that there was ample evidence at trial that showed that the press release was meant to mislead even if it was not literally false. The appellate court also affirmed Harkonen’s probationary sentence, which the government had cross-appealed.


Johnson & Johnson Pays More Than $2.2 Billion to Resolve Criminal and Civil Investigations
United States v. Janssen Pharmaceuticals, Inc.;
United States v. Scios, Inc.

Press Release
Docket Numbers: 2:13-CR-605 (E.D.P.A.); 3:11-cr-461 (N.D. Cal.)

On November 7, 2013, Janssen Pharmaceuticals, Inc., a subsidiary of Johnson & Johnson, Inc., pleaded guilty to charges stemming from its illegal promotion of the antipsychotic drug, Risperdal. From March 3, 2002, through Dec. 31, 2003, Janssen promoted Risperdal to physicians and other prescribers who treated elderly dementia patients. For most of this time period, Risperdal was only approved to treat schizophrenia. Under the terms of the plea agreement, Janssen paid a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million.

The global resolution included a civil agreement resolving allegations relating to Natrecor, a drug distributed by Johnson & Johnson subsidiary, Scios, Inc. Natrecor was approved to treat patients with acutely decompensated congestive heart failure who have shortness of breath at rest or with minimal activity. The government alleged that, shortly after Natrecor was approved, Scios launched an aggressive campaign to market the drug for scheduled, serial outpatient infusions for patients with less severe heart failure – a use not included in the FDA-approved label and not covered by federal health care programs. As part of the resolution, J&J and Scios agreed to pay the federal government $184 million to resolve their civil liability for the alleged false claims to federal health care programs. In October 2011, Scios pleaded guilty to a misdemeanor Food, Drug, and Cosmetic Act violation and paid a criminal fine of $85 million for introducing misbranded Natrecor into interstate commerce.

Wyeth Pharmaceuticals Pays $490.9 Million for Marketing the Prescription Drug Rapamune for Unapproved Uses
United States v. Wyeth Pharmaceuticals Inc.

Press Release
Docket Number: 5:13-CR-129 (W.D.O.K.)

On July 30, 2013, Wyeth Pharmaceuticals Inc., a pharmaceutical company acquired by Pfizer, Inc. in 2009, agreed to pay $490.9 million to resolve its criminal and civil liability arising from the unlawful marketing of the immunosuppressant drug, Rapamune. Wyeth Pharmaceuticals received approval from the FDA to use Rapamune for kidney transplant patients. However, Wyeth trained its national sales force to promote the use of the drug in non-renal transplant patients and encouraged them, through financial incentives, to target all transplant patient populations to increase Rapamune sales. Wyeth pleaded guilty to a criminal Information charging it with a misbranding violation under the Food, Drug, and Cosmetic Act and agreed to pay a criminal fine and forfeiture totaling $233.5 million. The resolution also included civil settlements with the federal government and the states totaling $257.4 million based on false claims stemming from Wyeth’s promotion of Rapamune for unapproved uses, some of which were not medically accepted indications and, therefore, were not covered by federal health care programs.

Consent Decree Entered Against New Jersey Pharmacy
United States v. Med Prep Consulting Inc. and Gerald R. Tighe

Press Release
Docket Number: 3:13-CV-3856 (D.N.J.)

On June 27, 2013, the District Court entered a consent decree of permanent injunction against Med Prep Consulting, Inc. (“Med Prep”), a New Jersey pharmacy and Gerald R. Tighe, its president and owner. A recent FDA inspection of defendants’ facility documented numerous deviations from current good manufacturing practice requirements for drugs. FDA’s inspection followed reports that the company had distributed intravenous drug products containing visible contaminants that were confirmed to be mold to a Connecticut hospital. FDA found that the company failed to create and follow appropriate procedures to prevent contamination of drugs which were purported to be sterile, that the company failed to properly clean and maintain its equipment to ensure the safety and quality of the drugs it manufactured, and that the company failed to conduct adequate investigations of injectable drugs that failed to meet minimum quality specifications. Med Prep voluntarily recalled all products in the field and halted production following the reports of the distribution of mold-contaminated product. The consent decree resolves the Government’s complaint by requiring Med Prep to take a wide range of actions to correct its violations and ensure that they do not happen again.

United States Files Suit Against Louisiana Pharmaceutical Company for Distributing Unapproved New and Misbranded Drugs
United States v. Sage Pharmaceuticals, Jivn Ren Chen and Charles L. Thomas

Press Release
Docket Number: 5:13-CV-1983 (W.D. La.)

On June 20, 2013, the United States filed suit against Sage Pharmaceuticals, Inc. its president Dr. Jivn Ren Chen, and it's Director of Corporate Quality, Charles L. Thomas. The Complaint alleges that the defendants violate the Federal Food, Drug, and Cosmetic Act by manufacturing and distributing unapproved new and misbranded drugs, specifically wound care products and over-the-counter (OTC) cold/cough remedies. In 2000, the government obtained an injunction against the company banning the manufacture and distribution of two unapproved new drugs. Since that time, FDA inspections revealed that defendants continue to manufacture and distribute other drug products without first obtaining the requisite approvals and without complying with FDA’s OTC regulations. The complaint seeks injunctive relief in order to halt defendants’ distribution of drug products that are potentially unsafe and ineffective.

Internet Pharmacy Supplier Receives Six-Year Prison Term
United States v. Michael Jackson and Lina Rodriguez

Press Release
Docket Number: 1:12-CR-20902 (S.D. Fla.)

On June 3, 2013, Michael Jackson was sentenced to 72 months’ imprisonment following his guilty plea to the first count of an indictment charging him with conspiracy to possess with the intent to distribute a controlled substance. Jackson supplied Adderall pills, which contain amphetamine, a Schedule II controlled substance, to his co-defendant, Lina Rodriguez, who operated an Internet pharmacy business that illegally shipped over $1.5 million of pharmaceuticals since July 2007 to U.S. and overseas purchasers. As part of his guilty plea, Jackson admitted to selling over 4,400 pills of Adderall to Rodriguez from about May 2009 to approximately December 2012, knowing and intending that she would sell them to her customers. The Court also ordered Jackson to forfeit the proceeds of his offense, over $18,000. Rodriguez, who pled guilty in February 2013, had been previously sentenced to a 72-month term of imprisonment.

ISTA Pharmaceuticals, Inc. Pleads Guilty and Agrees to Pay $33.5 Million to Resolve Criminal and Civil Charges Related to Off-Label Promotion of Xibrom
United States v. ISTA Pharmaceuticals

Press Release
Docket Number: 1:13-CR-99 (W.D.N.Y.)

On May 24, 2013, ISTA Pharmaceuticals pled guilty to felony charges stemming from ISTA’s promotion of Xibrom, an ophthalmic drug that is approved to treat pain and inflammation following cataract surgery. Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. In addition, ISTA offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce those physicians to prescribe Xibrom. Under the terms of the plea agreement, ISTA paid a criminal fine of $16,625,000 and a criminal forfeiture in the amount of $1,850,000. As part of a related civil settlement, ISTA agreed to pay $15 million to resolve allegations that it caused false claims to be submitted to government healthcare programs for Xibrom.

Generic Drugmaker Agrees to Record $500 Million Settlement
United States v. Ranbaxy USA

Press Release
Docket Number: 1:12-CV-250 (D. Md.)

On May 13, 2013, generic drug manufacturer Ranbaxy USA, Inc. pled guilty to a seven-count Information charging it with three felony violations of the Food, Drug, and Cosmetic Act, and four felony false statement counts related to its drug manufacturing operations at two of its Indian facilities. The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas, India. The company’s manufacturing processes and laboratory testing procedures were insufficient to ensure that the drugs were of the strength, purity, and quality that they were represented to possess. The Information also charges Ranbaxy with failing to timely file required “field alert” reports for batches of drugs that had failed certain tests, and with making false, fictitious, and fraudulent statements to the FDA in Annual Reports filed in 2006 and 2007 regarding the dates of stability tests conducted on certain batches of drugs. The company agreed to pay a total settlement of $500 million. Of that, $130 million will go toward a criminal fine, $20 million for criminal forfeiture, and $350 million to settle the False Claims Act allegations. The resolution is the largest settlement ever with a generic drug company.

Court Sentences Par Pharmaceutical Companies as Part of Global Resolution
United States v. Par Pharmaceutical Companies

Press Release
Docket Number: 2:13-MJ-8080 (D.N.J.)

On March 5, 2013, Par Pharmaceutical Companies pled guilty to a misdemeanor charge of introducing a misbranded drug in interstate commerce, in connection with Megace ES, a drug approved by the FDA for the treatment of significant weight loss in AIDS patients. Par admitted that it misbranded the drug by promoting Megace ES for non-AIDS related weight loss in the geriatric population. Par was sentenced and ordered to pay an $18 million criminal fine and forfeit $4.5 million. Under the terms of its plea agreement, Par agreed to abide by several compliance measures, including maintaining policies that exclude from incentive compensation any sales that may indicate off-label promotion of Par’s products. The criminal plea occurred along with a civil settlement of False Claims Act violations by Par, as alleged in three qui tam lawsuits. In the civil settlement, Par agreed to pay $22.5 million to the federal government and various states to resolve claims arising from its unlawful marketing of Megace ES.

Former President of Canadian Internet and Mail Order Pharmacy Receives 4-Year Prison Sentence
United States v. Andrew Strempler

Press Release
Docket Number: 1:11-CR-20385 (S.D. Fla.)

On January 9, 2013, Andrew Strempler, a Canadian citizen, was sentenced to 48 months’ imprisonment, two years of supervised release, and fined $25,000 in connection with his role in an illegal Internet pharmacy. In October 2012, Strempler pled guilty to conspiracy to commit mail fraud in connection with his role as owner and president of a Canadian company that was an Internet, mail, and telephone order pharmacy, through which Strempler and others marketed and sold prescription drugs to residents of the United States. Strempler and his co-conspirators falsely represented that his company was selling safe prescription drugs in compliance with regulations in Canada, the United Kingdom and the United States. In fact, Strempler obtained the prescription drugs from various other source countries without properly ensuring the safety or authenticity of the drugs. Some of the drugs sold by Strempler included counterfeit drugs.

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All Defendants Convicted in Trial of Former Peanut Company Officials
United States v. Stewart Parnell, Michael Parnell, Samuel Lightsey, and Mary Wilkerson

Press Release
Docket Number: 1:13-CR-12 (M.D. Ga.)

On September 19, 2014, a jury convicted two former Peanut Corporation of America (PCA) officials and a PCA broker on charges relating to the distribution of salmonella-tainted peanuts and peanut products following a two-month jury trial in Albany, Georgia. Stewart Parnell, the former President and Owner of PCA, and Michael Parnell, a former PCA food broker, were convicted of mail and wire fraud, the introduction of misbranded food into interstate commerce with the intent to defraud or mislead, and conspiracy. Stewart Parnell was also convicted of introducing adulterated food into interstate commerce, and both he and Mary Wilkerson, a former PCA Quality Assurance Manager, were convicted of obstruction of justice.

The charges arose from the defendants participation in several schemes by which they and others defrauded PCA customers, misleading these customers about the existence of foodborne pathogens, most notably salmonella, in the peanut products PCA sold to them. The defendants and others fabricated certificates of analysis – documents sent to customers containing a summary of laboratory results – in order to hide the fact that the peanut products either had tested positive for salmonella, or had never been tested for pathogens at all. Two other defendants, Samuel Lightsey and Daniel Kilgore, pleaded guilty prior to trial. A sentencing date has not yet been set.


District Court Enters Permanent Injunction against Pennsylvania-Based Dairy Firms and Individuals to Prevent Distribution of Foods That Contain Excessive Drug Residue
United States v. Metzler & Sons LLC, Pleasant View Farms, Rodney L. Metzler, Gretchen Metzler, Rodney T. Metzler, and Lee Metzler

Press Release
Docket Number: 3:13-CV-283 (W.D. Pa.)

On December 23, 2013 a U.S. District Court Judge entered a consent decree of permanent injunction against Metzler & Sons, Pleasant View Farms, Rodney L. Metzler, Gretchen Metzler, Rodney T. Metzler and Lee Metzler, designed to prevent the distribution of foods that contain excessive drug residue. The Pennsylvania firms own and operate several farms that sell cows for slaughter and for use as food. Inspections by the FDA and laboratory analyses performed by the Department of Agriculture indicated that the defendants sold cows that contained excessive levels of antibiotic residues in their edible tissues. Among other things, the permanent injunction requires the firms to establish and implement a written record-keeping system for every animal receiving drugs to prevent the firms from selling or distributing any animal whose edible tissues contain new animal drugs in amounts above the levels permitted by law.

Court Grants Summary Judgment against Houston Food Producer
United States v. Chung's Products, LP, Charlie A. Kujawa, and Gregory S. Birdsell

Press Release
Docket Number: 1:13-CV-759 (S.D.T.X.)

On April 3, 2013, the court granted summary judgment against Chung’s Products, LP, Charlie A. Kujawa, Chung’s president of operations, and Gregory S. Birdsell, Chung’s former director of quality assurance for violations of the Food, Drug, and Cosmetic Act (“FDCA”). The defendants manufacture ready-to-eat products such as seafood and vegetable eggrolls, as well as import and sell frozen, pre-packaged “Asian-style snacks” and spring rolls from their facility in Houston, Texas. The court’s ruling found that the defendants had a long history of violating the FDCA, including producing food under insanitary conditions, failing to control for the risks of Clostridium Botulinum, a highly potent toxin, in their seafood products, and a potentially deadly strain of listeria in their manufacturing environment. The court enjoined the defendants from receiving, processing, preparing, packing, holding and distributing food from Chung’s Houston-based facility or any other facility until defendants take the remedial action required by the court’s order.

Court Entered Consent Decree against Peanut Butter Manufacturer
United States v. Sunland, Inc., and Jimmie D. Shearer

Press Release
Docket Number: 2:12-CV-1312 (D.N.M.)

On December 20, 2012 the government brought suit and the court entered a consent decree of permanent injunction against Sunland, Inc., a New Mexico-based producer of peanut butter, and Jimmie D. Shearer, its President and Chief Executive Officer, based on their distribution of adulterated foods contaminated by Salmonella. FDA inspections conducted and confirmed that certain of Sunland’s nut products were contaminated with Salmonella Bredeney and established the widespread presence of Salmonella Bredeney in Sunland’s facility. The Centers for Disease Control and Prevention reported that since September 2012 at least 35 people from 19 states were infected with a strain of Salmonella Bredeney that was tied to peanut butter manufactured by Sunland. Among other things, the consent decree requires Sunland to develop and implement sanitation control programs, and implement testing, monitoring and remediation protocols.

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Consent Decrees Filed in Toy Case
United States v. Toys Distribution, Inc., et al.

Press Release
Docket Number: 2:14-CV-1364 (C.D. Cal.)

On June 11, 2014, the United States District Court for the Central District of California entered three separate consent decrees shutting down the importation and sales activities of four California companies (Toys Distribution, Inc. dba TDI International, S&J Merchandise, Inc., BLJ Apparel, Inc., and All Season Sales, Inc.) and six individuals (Loan Tuyet Thai, Lan My Lam, Paul Phuong, Cuc T. Thai, Tom Liu, and Luan Luu) as a result of their imports of illegal children’s products. Among other things, the children’s products contained lead, phthalates, and small parts inappropriate for children under age three.

Phthalates are chemical plasticizers which make certain products flexible, and certain types of phthalates are banned from use in children’s toys and other child care products. The Consumer Product Safety Commission (CPSC) determined through an investigation that the defendants imported various items into the United States in violation of the Consumer Product Safety Act (CPSA) and the Federal Hazardous Substances Act (FHSA). The violative products that were imported included: toy cars with impermissible lead content and small parts hazards, toy musical instruments with small parts hazards, dolls containing impermissible levels of lead and phthalates, rattles that failed to meet the infant rattle standards, a toy telephone with small parts hazards, and a children’s kitchen set and police set that both exceeded the lead content limit.

Civil Penalty and Injunction Action Filed for Delay in Reporting Oven Hazard
United States v. Electrolux

Press Release
Docket Number 1:14-CV-117 (S.D. GA.)

On May 14, 2014, the United States filed a complaint alleging that Electrolux Home Products, Inc., knowingly failed to report immediately to the U.S. Consumer Product Safety Commission a safety hazard associated with certain wall ovens sold to consumers. The complaint alleged that Electrolux became aware of incidents in which gas could build up in the oven during broiling and escape and ignite, causing burn and fire hazards to consumers. Specifically, between February 2006 and November 2007, it was alleged that Electrolux knew of 22 consumer reports of flames shooting out of the oven when the broiler was on.

The incidents resulted in consumer injuries ranging from singed hair to facial burns. Electrolux failed to immediately report hazards with the oven, despite the fact that Frigidaire Canada, Electrolux’s sister company, identified the defective and hazardous nature of the ovens in January 2005 and implemented a design change to fix the defect in March 2006. Electrolux imported and distributed approximately 7,800 of the Kenmore ovens that were sold by Sears and other stores throughout the United States. To resolve the allegations, Electrolux has agreed to pay a civil penalty of $750,000 and has also agreed to establish and maintain a compliance program with internal recordkeeping and monitoring systems to keep track of information about product safety hazards. The Court entered the agreed upon order by the parties as the final judgment in the matter.

Civil Penalty Consent Decree Entered in Import Case as Part of Global Settlement
United States v. LM Import-Export, Inc. and Hung Lam

Press Release
Docket Number: 1:11-CV-20765 (S.D. Fla.)

On April 30, 2012, the court entered a Consent Decree directing defendants, LM Import-Export, Inc., and Hung Lam to pay a $287,500 civil penalty. LM Import-Export, Inc., owned and operated by Lam, was importing and distributing children’s products that did not comply with the Consumer Product Safety Act and the Federal Hazardous Substances Act. LM’s products lacked required safety labeling, exceeded permissible lead paint and lead content levels, and violated small parts requirements. Defendants were permanently enjoined from importing or distributing children’s products in an earlier consent decree entered in March 2011. The civil penalty is part of a global settlement which also involves a criminal action against the defendants.

Last of Four Defendants Sentenced in Connection with Submission of False Child Lighter Safety Testing Data to the Consumer Product Safety Commission
United States v. Karen Forcade, Joyce Serventi, Stephanie Van Treuren, and Nancy Buhrmann

Press Release
Docket Number: 2:09-CR-490 (D.N.J.)

On August 1, 2011, Joyce Serventi was sentenced to 24 months of supervised release for her role in a conspiracy to submit false data to the Consumer Product Safety Commission relating to child-resistance testing of cigarette and multipurpose lighters. Serventi was the owner of the now-defunct Results Research, a marketing research company, that was hired by co-conspirator Karen Forcade purportedly to perform child-resistance lighter testing. Forcade, Serventi, and codefendant Stephanie Van Treuren each pleaded guilty to a conspiracy to fabricate dozens of documents and photographs concerning child-resistance lighter safety testing that never occurred. They allegedly fabricated parental consent forms, birth dates, names, genders and testing locations regarding children who did not exist.

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Auto Dealer Pleads Guilty in Odometer Fraud Scheme
United States v. Edward Capicchioni

Press Release
Docket Number: 5:14-CR-71 (E.D.P.A)

On March 20, 2014, Edward Capicchioni pled guilty to one count of conspiracy to tamper with odometers and make false odometer certifications. Doing business under the name The General’s Auto Sales, Capicchioni purchased high mileage vehicles from individual sellers and worked with a co-conspirator to roll back and alter the odometers. He then resold the vehicles at a wholesale auto auction in Pennsylvania, representing that the false, low mileages were accurate. Capicchioni sold more than 50 vehicles with rolled back odometers as part of the scheme.

Defendant in Odometer Tampering Scheme Sentenced to 18 Months’ Imprisonment
United States v. Francis Marimo

Press Release
Docket Number: 5:13-CR-106 (E.D.N.C.)

Francis Marimo, of Raleigh, N.C., was sentenced on December 20, 2013, to 18 months’ imprisonment and one year of supervised release in connection with an odometer tampering scheme. Marimo also was ordered to pay $190,845 in restitution. Marimo pleaded guilty in June 2013 to an Information alleging two counts of odometer tampering relating to vehicles he fraudulently sold between 2008 and 2012. Marimo purchased used vehicles primarily through online advertisements, replaced the existing odometers with odometers showing lower mileages, and then sold the vehicles to consumers while representing the low mileages as accurate. Marimo has filed a notice of appeal. Learn More.

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District Court Rejects Challenge to FDA Approval of Generic Drug
Cumberland Pharmaceuticals Inc. v. FDA

Docket Number: 1:12-CV-1842 (D.D.C.)

On September 30, 2013, the district court granted summary judgment to the government in a case brought by Cumberland Pharmaceuticals challenging FDA’s approval of a generic drug product that competes with Cumberland’s brand-name product, Acetadote. This drug is used to prevent kidney injury for those who have taken a large dose of acetaminophen. When FDA initially approved Acetadote, the drug contained, as an inactive ingredient, edetate disodium (“EDTA”). Cumberland alleged that it spent millions studying the issue and concluded that the product did not need EDTA. Cumberland then submitted a supplemental New Drug Application for a new formulation of Acetadote that did not contain EDTA, FDA approved the supplement, and Cumberland removed the old formulation from the market.

In November 2012, FDA approved a generic product that contains EDTA and is identical to the original product marketed by Cumberland. Under FDA regulations, approval of a generic product that is identical to a product that has been removed from the market is not permissible if the original product was withdrawn for safety reasons. The court agreed with FDA’s conclusion that Cumberland’s original product had not been withdrawn for safety reasons, and approval of the generic was proper.


District Court Dismisses Suit Challenging FDA Regulations Governing Artificial Insemination
Doe v. Hamburg

Docket Number: 3:12-CV-3412 (N.D. Cal.)

On July 16, 2013, the district court dismissed an action challenging the constitutionality of FDA regulations governing sperm donation. Plaintiff Jane Doe alleged that she was in a committed, same-sex relationship and wished to conceive a child via artificial insemination using sperm from a specific private donor in lieu of sperm bank. Because such donation might have been subject to FDA regulations requiring, among other things, medical testing of donors and registration with the FDA, plaintiff Doe sought to challenge those regulations as unconstitutionally burdening her right to conceive a child. The government moved to dismiss the case on prudential standing grounds and for failure to state a claim. After hearing oral argument in June, the court granted the motion and dismissed the complaint on prudential standing grounds, agreeing with the government that Doe’s claims were derivative of the donor’s claims and that Doe failed to assert independent rights personal to her.

Updated July 8, 2016

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