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Wednesday, August 5, 2015

Businessman Sentenced to Five Years in Federal Prison for Conspiracy to Misbrand a Product for Human Consumption, Money Laundering

Labeling Failed to Disclose That “Potion 9” Contained an Ingredient Known to Metabolize into What is Commonly Referred to as a “Club Drug” or “Date Rape Drug.”

Tayfun Karauzum, 45, of Newport Beach, California, has been sentenced in U.S. District Court in Providence, Rhode Island, to five years in federal prison for manufacturing, marketing and distributing for human consumption Potion 9, a product containing butanediol, an industrial solvent that rapidly metabolizes into gammahydroxybutyric acid (GHB) – commonly referred to as a “club drug” or “date rape drug.”

Karauzum was the owner of Max American Distribution LLC in Newport Beach through which he marketed and distributed between $1 million and $2.5 million worth of Potion 9 through online sales and dietary supplement companies.

An investigation by the U.S. Attorney’s Office for the District of Rhode Island and the Rhode Island U.S. Food and Drug Administration (FDA) Task Force, with the assistance of the U.S. Postal Inspection Service and IRS Criminal Investigation, determined that Karauzum provided to a lab the ingredients for the manufacture of his Potion 9, including unlabeled containers of butanediol, which Karauzum claimed to be a proprietary ingredient.  Karauzum also provided labels for the packaging of Potion 9, which did not list butanediol as an ingredient.

Karauzum marketed Potion 9 as a “mood enhancer” that “may improve stamina and energy, promote a feeling of well-being, produce euphoria, [and] increase intensity of orgasms.”

The investigation revealed that Karauzum caused to have manufactured and made available for distribution nearly 13.5 million milliliters of the misbranded product Potion 9.  The investigation also determined that Karauzum routinely transferred proceeds from the sale of Potion 9 sales in increments in excess of $10,000 from his business’ PayPal account into a personal bank account.

Karauzum’s sentencing is announced by U.S. Attorney Peter F. Neronha of the District of Rhode Island and Acting Special Agent in Charge Jeff Ebersole of the Office of FDA Criminal Investigations’ New York Field Office.

“The misbranding of drugs is an ongoing and increasing threat to public safety in general,” said U.S. Attorney Neronha.  “Here, the defendant’s criminal conduct was particularly egregious.  He misbranded not just any drug, but an incredibly dangerous one, one used to victimize unsuspecting innocent people, on an enormous scale.  The lengthy prison sentence he has received is well-deserved.”

“The defendant’s actions exposed unsuspecting consumers to potentially serious danger,” said Acting Special Agent in Charge Ebersole.  “This investigation demonstrates the Office of Criminal Investigations’ commitment to vigorously pursue criminal violations that threaten the public health.  We thank our partners from the U.S. Attorney’s Office in the District of Rhode Island, the U.S. Postal Inspection Service and the Criminal Investigation Division of the Internal Revenue Service for their efforts in this case.”

At sentencing, U.S. District Court Chief Judge William E. Smith also ordered Karauzum to serve three years supervised release upon completion of his prison term.  Karauzum pleaded guilty on Jan. 30, 2015 to one count of conspiracy to misbrand a product for human consumption and one count of money laundering.

The case was prosecuted by Assistant U.S. Attorneys Sandra R. Hebert and Richard B. Myrus.

Updated August 5, 2015