New York Man Charged With Selling Illegal Dietary Supplements Online

ATLANTA - Chenhsin Chan, a/k/a Paul Chan has been arraigned on federal charges of mail fraud, the introduction into interstate commerce of adulterated food, the knowing distribution of a listed chemical, and money laundering. 

“Chan is charged with marketing and selling dietary supplements that he knew contained ephedrine which the FDA has determined creates unreasonable risks when used for dieting,” said United States Attorney Sally Quillian Yates.  “By putting those unsafe products on the market, he put his customers at risk of illness.   Public safety is our priority.  We will protect our citizens and the marketplace through criminal prosecution, if necessary.”   

According to United States Attorney Yates, the charges, and other information presented in court:  Chenhsin Chan owned and operated The Wholesale Source, LLC, a company that marketed and sold dietary supplements, primarily through affiliated websites including www.thatswholesale.com and www.ephedrawholesale.com. 

From at least July 2005 through August 2012, Chan allegedly marketed and sold dietary supplements on his websites that contained ephedrine alkaloids.  In April 2004, the United States Food and Drug Administration (“FDA”) published a final rule declaring dietary supplements containing ephedrine alkaloids to be adulterated food because they present an unreasonable risk of illness or injury.  Chan was allegedly warned by FDA investigators in June 2005 that it was illegal to sell dietary supplements containing ephedrine, but he continued to do so. 

Chan’s websites allegedly made materially false and misleading claims concerning the use of ephedrine, such as that ephedrine has been approved by the FDA for treatment of any disease, and that ephedrine has “never been illegal.”  These false claims were allegedly designed to lure customers into believing that it was legal to purchase dietary supplements containing ephedrine, when it was not.  During the period of the scheme, Chan allegedly sold over $4.3 million in dietary supplements that were adulterated with ephedrine, including to customers in the Northern District of Georgia. 

Chan is also charged with money laundering for using proceeds from the alleged mail fraud scheme to purchase real property in New York for over $1 million in cash and a 2012 Mercedes Benz for over $50,000 in cash.  The indictment seeks criminal forfeiture of, among other things, the same real property and Mercedes Benz, as well as a 2005 Lamborghini Gallardo and over $666,000 in cash. 

Members of the public are reminded that the indictment only contains charges.  The defendant is presumed innocent of the charges and it will be the government’s burden to prove the defendant’s guilt beyond a reasonable doubt at trial.

This case is being investigated by the U.S. Food and Drug Administration Office of Criminal Investigations.

Assistant United States Attorneys Steven D. Grimberg and Michael J. Brown are prosecuting the case.

For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016.  The Internet address for the home page for the U.S. Attorney’s Office for the Northern District of Georgia Atlanta Division is http://www.justice.gov/usao/gan/.