Owner of Dietary Supplement Company Sentenced to Prison for Multimillion-Dollar Scheme to Adulterate Dietary Supplements
Company’s Executive Vice President Pleads Guilty to Obstruction of an Agency Investigation
The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, was sentenced to prison today for the sale of diluted and adulterated dietary ingredients and supplements, the Department of Justice announced.
Barry Steinlight, 70, of Hackettstown, New Jersey, was sentenced by U.S. District Court Judge Esther Salas of the District of New Jersey to serve 40 months in prison and one year of supervised release. Steinlight was also ordered to forfeit $1 million in profits from his fraudulent scheme. Steinlight previously pleaded guilty to a one-count information charging him with conspiring to commit wire fraud.
“The Justice Department has increased its attention on supplement sellers like Barry Steinlight who sell products that are not what they claim to be,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will investigate and prosecute companies and individuals that sell supplements that threaten the health of the American public and drain their bank accounts with misrepresented products.”
Steinlight was the president and owner of Raw Deal Inc., a dietary supplement manufacturer. In pleading guilty, Steinlight admitted that from at least 2009 through November 2013, he instructed Raw Deal employees to add “fillers,” including maltodextrin, viobin cocoa replacer and rice flours, to the dietary ingredients and supplements sold to customers. These “fillers” were added without customer consent or knowledge. Steinlight also directed Raw Deal employees not to list the “fillers” as ingredients on certificates of analysis issued to its customers as proof of the identity of the ingredients contained in the products. During his plea hearing, Steinlight admitted that Raw Deal Inc.’s gross profits during the scheme were between $7 million and $20 million.
Yesterday, Raw Deal’s executive vice president, Catherine Palmer, 38, of Budd Lake, New Jersey, pleaded guilty to a one-count information charging her with obstructing an agency investigation. The obstruction charge carries a statutory maximum sentence of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense. Her sentencing is scheduled for Dec. 21.
According to court documents, Palmer lied to U.S. Food and Drug Administration (FDA) investigators and ordered a subordinate to falsify a dietary supplement product’s ingredient list before submitting it to the FDA. In addition, she admitted instructing a Raw Deal employee not to run blenders during the 2012 inspection so that the FDA would not see “fillers” being added to customer orders. This practice hid from the FDA the fact that Steinlight and Raw Deal diluted the products before sale to unsuspecting customers.
Court documents also revealed that Steinlight directed Raw Deal employees to create certificates of authenticity that falsely claimed that certain Raw Deal products were kosher or organic.
“Consumers expect labels that accurately describe the products they ingest,” said U.S. Attorney Paul J. Fishman of the District of New Jersey. “Steinlight deceived his customers as part of a four-year scheme in which he delivered bogus, mislabeled products. Today he was appropriately punished for his crime.”
“Today’s announcement demonstrates that those who sell adulterated dietary supplements and purposely subvert the regulatory functions of the FDA by providing false and misleading information will be held accountable for their actions,” said Acting Special Agent in Charge Jeffrey J. Ebersole of the FDA Office of Criminal Investigations’ New York Field Office. “We commend the efforts of the Department of Justice for vigorously pursuing the prosecution of this matter.”
Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Fishman commended the investigative efforts of the FDA’s Office of Criminal Investigations. The government is represented by Assistant U.S. Attorney Joseph Mack of the District of New Jersey, Deputy Chief of the office’s Health Care and Government Fraud Unit; Special Assistant U.S. Attorney Shannon M. Singleton of 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 District of New Jersey also assisted in the criminal investigation.