Diet supplement king gets 50 months in prison
Head of Georgia company sold knockoff prescription drugs on Internet
by Mike Brunker
Writing the final chapter in a strange criminal saga, a federal judge has sentenced the president of a Georgia company that manufactures popular lines of herbal dietary supplements to 50 months in prison for illegally selling knockoff prescription drugs over the Internet.
U.S. District Judge Jack T. Camp also fined Hi-Tech Pharmaceuticals CEO Jared Wheat $50,000 and ordered him, the company and other individual defendants to forfeit $3 million in proceeds from the scheme.
Also sentenced Friday was co-defendant Sergio Oliveira, a Hi-Tech sales associate. He was given 20 months in prison and fined $20,000.
The judge previously sentenced Hi-Tech officials Stephen D. Smith and Tomasz Holda to serve 27 months and 16 1/2 months, respectively. Holda’s sentence will be served consecutively with time he is now serving for a federal firearms offense.
In a plea bargain, the defendants admitted to operating a manufacturing facility in Belize that made generic versions of such pharmaceuticals as Xanax, Valium, Ambien, Vioxx, Zoloft, Viagra and Cialis and selling them over the Internet without requiring prescriptions.
The plea bargain recommended that Wheat receive a prison sentence of 37 months, but Judge Camp rejected that at a sentencing hearing last month, saying it was not severe enough for “the seriousness of the conduct.”
He then gave the defendants the option of taking the case to trial or accepting the tougher penalties he imposed on Friday.
Diet supplements or drugs?
The sentencing ends an unusual criminal case that explored both illegal online pharmacies and the legal but barely regulated U.S. dietary supplements industry.
As first reported by msnbc.com in April 2007 , prosecutors initially accused Wheat of running a “continuing criminal enterprise” — a racketeering statute typically used to prosecute organized crime syndicates — that could have sent him to prison for a minimum of 20 years and resulted in the forfeiture of his company. That charge was dropped during plea negotiations.
Prosecutors also backed off from earlier assertions that the Norcross, Ga., company’s successful lines of herbal dietary supplements — they are carried by many major U.S. retailers as well as thousands of convenience stores — had been spiked with ephedrine alkaloids even after the U.S. Food and Drug Administration banned the use of the substance in 2004. The agency said it acted after finding that ephedrine alkaloids — the active agent in the ephedra plant — presented “an unreasonable risk of illness or injury.”
Also missing from the final plea deal was any reference to the prosecution’s contention that Wheat, Smith and Holda conspired to murder am FDA agent and blackmail a former assistant U.S. attorney general. That sensational allegation, based on information provided by confidential informants, surfaced in court documents filed in March 2006 by prosecutors in response to Wheat’s bid to be released on bond.
Motivated by greed?
While the case grew narrower as it progressed, prosecutors said the scheme to sell generic versions of prescription drugs manufactured in an unsanitary warehouse in Belize was fraught with peril for unsuspecting purchasers.
In a statement announcing the guilty pleas in August 2008, David E. Nahmais, U.S. attorney for the northern district of Georgia, said the defendants exposed customers to unknown health risks and violated patents in the name of “greed, pure and simple.”
Wheat, in an exclusive interview with msnbc.com in December 2007, said he legally manufactured the generic drugs from distribution in countries where they were not legally protected and accused prosecutors of smearing his reputation and harming his thriving dietary supplement business.
Among Hi-Tech’s leading products are Stamina-Rx, which it describes as a “maximum sexual stimulant,” Lipodrene, “for advanced appetite control and metabolic stimulation,” and Metanabol, a “revolutionary catalyst for increasing lean mass and strength.”