Owner of Dietary Supplement Company Pleads Guilty to Multi-Million Dollar Scheme to Adulterate Dietary Supplements
The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, pleaded guilty today to conspiracy to commit wire fraud in relation to a scheme in which he directed the sale of diluted and adulterated dietary ingredients and supplements sold by his company, U.S. Attorney Paul J. Fishman announced.
Barry Steinlight, 69, of Hackettstown, New Jersey, pleaded guilty to a one-count information charging him with conspiring to commit wire fraud. As part of his plea agreement, Steinlight admitted that Raw Deal’s gross sales during the scheme were between $7 million and $20 million. Steinlight has agreed to forfeit more than $1 million in profits from the scheme.
“Barry Steinlight diluted his products, cheated his customers and lied to the Food and Drug Administration when they came to inspect his company,” said U.S. Attorney Fishman. “This scheme went on for four years and essentially became the business model at his company. People who sell and use dietary supplements have the right to expect that the ingredients are listed and they get what they paid for.”
“This dietary supplement company owner ignored his basic obligations in his pursuit for profit,” said Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division. “American consumers have a right to know that the dietary supplements they purchase are safe to consume and that the ingredients listed on the label are actually in the bottle. This case demonstrates the Department of Justice’s commitment to ensuring that those who deal products affecting the health and safety of consumers are law abiding and that wrongdoers will be held accountable.”
According to documents filed in this case and statements made in court:
Steinlight was the president and owner of Raw Deal Inc., a dietary supplement manufacturing facility. From at least 2009 through November 2013, Steinlight instructed Raw Deal employees to add “fillers,” including maltodextrin, viobin cocoa replacer and rice flours to the dietary ingredients and supplements packaged for, and sold to, Raw Deal’s customers. These “fillers” were added without customer consent or knowledge. Steinlight also directed Raw Deal employees not to list the “fillers” as ingredients on the certificates of analysis (COAs) issued to its customers as proof of the identity of the ingredients contained in the products.
In addition to directing the dilution and adulteration of Raw Deal’s products, Steinlight also directed Raw Deal employees to create COAs that falsely certified that certain of Raw Deal’s products were kosher or organic. Further during an U.S. Food and Drug Administration (FDA) inspection of Raw Deal in February 2012, Steinlight instructed Raw Deal employees to alter a document before providing it to the FDA.
U.S. Attorney Fishman credited special agents of the FDA’s Office of Criminal Investigations, under the direction of Acting Special Agent in Charge James J. Royal, who investigated the case.
“When a company distributes adulterated and misbranded dietary supplements, they put consumers at risk,” said Acting Special Agent in Charge Royal. “Today’s plea agreement should serve as a reminder that FDA’s Office of Criminal Investigations will continue working with the Department of Justice to protect consumers from public health risks and fraud.”
The conspiracy charge carries a statutory maximum sentence of five years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense. Sentencing is scheduled for March 30, 2015.
The government is represented by Assistant U.S. Attorney Joseph Mack, Deputy Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, Special Assistant U.S. Attorney Shannon M. Singleton from the FDA’s Office of Chief Counsel, and Trial Attorneys Patrick Runkle and David Sullivan of the Civil Division’s Consumer Protection Branch. Paralegal Jeffrey Skonieczny of the U.S. Attorney’s Office also assisted in the criminal investigation.
U.S. Attorney Fishman reorganized the health care fraud practice at the U.S. Attorney’s Office for the District of New Jersey shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $620 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug, and Cosmetic Act and other statutes.