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Justice News

Department of Justice
U.S. Attorney’s Office
District of Montana

Wednesday, April 24, 2013

Paul Daniel Bottomley Pleads Guilty In U.S. Federal Court

The United States Attorney's Office announced that during a federal court session in Missoula, on April 24, 2013, before U.S. Magistrate Judge Jeremiah Lynch, PAUL DANIEL BOTTOMLEY, a 48-year-old resident of Belgrade, Montana, pled guilty to Misprision of a Felony. Sentencing has been set for July 31, 2013. He is currently released on special conditions.

In an Offer of Proof filed by Assistant U.S. Attorney Jessica T. Fehr, the government stated it would have proved at trial the following:

In April of 2010, the Food and Drug Administration, Office of Criminal Investigations (FDA-OCI) began to investigate a source of supply for unapproved oncology (cancer) drugs - Montana Health Care Solutions (MHCS). MHCS was owned by PAUL DANIEL BOTTOMLEY. The business was opened in 2008.

The investigation uncovered that BOTTOMLEY imported misbranded and unapproved cancer drugs from foreign countries and sold those drugs to American physicians - all of which violates the Food, Drug, and Cosmetics Act (FDCA) of the United States.

In October of 2010, BOTTOMLEY sold MHCS to Canada Drugs, Ltd. (hereinafter "Canada Drugs"), an Internet based pharmacy corporation located in Winnipeg, Manitoba, Canada. Canada Drugs is owned by Krisjtan Thorkelson. Rockley Ventures, Ltd. (hereinafter "Rockley Ventures"), a Canada Drugs subsidiary, was based in Barbados and was managed in large part by Tom Haughton. Rockley Ventures paid BOTTOMLEY $5 million for MCHS. Canada Drugs, Rockley Ventures, and the related companies retained BOTTOMLEY's company's name, domain name, any stock on hand, and his physician distribution list. While the companies continued to solicit and distribute to BOTTOMLEY's previous customers using his company's name and letter head, the companies significantly increased the number and type of drugs offered to the physicians.

BOTTOMLEY was also to remain as an advisor to Rockley Ventures, Canada Drugs and related companies following the sale of MHCS. BOTTOMLEY was paid $10,000 per month for his advisory services by the companies. In his advisor capacity, BOTTOMLEY occasionally made sales calls to physicians or office managers and dealt with shipment issues.

On January 13, 2012, FDA-OCI received information from the United Kingdom Medicines and Healthcare Products Regulatory Agency (MHRA), United Kingdom, regarding a potential counterfeit oncology drug known as Avastin(r) (marketed in Turkey as Altuzan). Avastin(r) is a prescription drug that requires a uniform cold temperature during shipment. Avastin(r) is a prescription drug that is typically intravenously infused into cancer patients. MHRA informed FDA-OCI that they had became aware of a United Kingdom wholesaler that purchased 167 packs of Avastin(r) 400 mg from a supplier in the European Union (EU). The United Kingdom wholesaler shipped 41 of the identified packs of Avastin(r) to Volunteer Distribution ("Volunteer"), a company located in Gainesboro, Tennessee. Volunteer Distribution had a pharmaceutical distribution contract with QSP, a subsidiary company of Canada Drugs. Volunteer Distribution received oncology drugs with the understanding that they would ship those drugs to clients once they were provided with a client and packing list. Normally, Volunteer Distribution would receive a quantity of oncology drugs from the United Kingdom which were stored until the client and packing list were received. The packing list would specify the names of clients, their mailing address and the drugs they were to receive. The packing list also included "Montana Healthcare Solutions" in the upper left-hand corner with a symbol associated with MHCS.

Initial preliminary analysis conducted by MHRA with the United Kingdom wholesaler indicated at minimum the potential existence of counterfeit labeling on the Avastin(r) in question. A subsequent lab analysis of the Avastin(r) determined the drug to be counterfeit - the substance seized and tested did not contain any of the active drug ingredient bevacizumab that is found in legitimate versions of Altuzan and Avastin(r). It was determined that Volunteer Distribution had already shipped 36 of the 41 packs of Avastin(r). The 5 remaining packs of the counterfeit Avastin(r) were shipped back to the United Kingdom wholesaler. The counterfeit Avastin(r) was shipped to Volunteer Distribution from a company identified as River East Supplies, Ltd. ("River East"), which is located in the United Kingdom.

Following a review of the Volunteer Distribution records FDA-OCI was able to identify customers that received oncology drugs from Volunteer - including the counterfeit Avastin(r). Numerous physicians or practice managers were interviewed by law enforcement about their purchases form MHCS. Most interviewed stated that their point of contact was PAUL BOTTOMLEY, who was a sales representative for MHCS. The physicians and practice managers interviewed confirmed that the drugs they received from Volunteer were sent pursuant to orders they placed with MHCS, and that payments for the shipments were made to MHCS for the drugs received from Volunteer.

Some physicians and practice managers admitted to law enforcement that they knew the drugs were foreign versions of United States approved products based on the price being charged as well as the packaging. For example, MHCS charged $1,700 per vial for Avastin(r), when the product would normally cost nearly $2,300 per vial. Some physicians admitted that although they knew the drugs were foreign, unapproved versions of U.S. prescription drugs, they still billed insurance programs the prices they would bill for U.S. prescription drugs.

At the time of the shipments of the counterfeit Avastin(r) into the United States, MHCS was owned and operated as a subsidiary of Canada Drugs and Rockley Ventures. Canada Drugs and Rockley Ventures were responsible for the shipment of misbranded, adulterated and counterfeit drugs into the United States, all in violation of the FDCA.

Although BOTTOMLEY had no involvement in the importation or distribution of the counterfeit Avastin(r), BOTTOMLEY did become aware of the distribution of the counterfeit Avastin(r) by January of 2012. By that date, BOTTOMLEY would have been aware and had concerns about the pedigree and purity of the drugs that were being imported and sold by Canada Drugs and Rockley Ventures. In particular, BOTTOMLEY was aware at that time that Canada Drugs and Rockley Ventures were importing and distributing misbranded and unapproved drugs in violation of federal law. BOTTOMLEY also failed to notify authorities of the fact that Canada Drugs and Rockley Ventures were importing and distributing

In a separate civil proceeding handled by AUSA Victoria Francis, BOTTOMLEY agreed to forfeit to the United States $1,088,378.17 in United States currency, a 2011 Aston Martin/Vantage V-12 and 10 parcels of real property in Gallatin County, Montana. The property was forfeited because the government established the property was the proceeds of the illegal activity outlined in the criminal case. The total forfeiture in the matter is valued at approximately $6 million.

The defendant's conduct in this case was motivated by greed. Bottomley utilized the grey market and sold potentially dangerous unapproved and misbranded pharmaceuticals at discounted prices to American physicians all for a healthy profit. Today's prosecution and the sizeable forfeiture taken in the related civil case demonstrates that the safety and health of the American public is paramount to the U.S. Attorney's Office," U.S. Attorney for the District of Montana Michael W. Cotter.

The defendant in this case violated the law by selling grey-market, unapproved pharmaceuticals, a dangerous practice that puts at risk the health and safety of the American consumer. FDA's Office of Criminal Investigations will continue to pursue those that threaten the safety and security of the public by engaging in the distribution of counterfeit and unapproved medicines. We commend the United States Attorney's office for their commitment to supporting this prosecution," John Roth, FDA-OCI Director.

BOTTOMLEY faces possible penalties of 3 years in prison, a $250,000 fine and 1 year supervised release.

The investigation was conducted by the Food and Drug Administration, Office of Criminal Investigations.

Updated January 14, 2015