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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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August 30, 2010: Spectranetics Executives Indicted for Conspiracy, False Statements, Import Violations and Introduction and Receipt of Misbranded Medical Devices

 

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Food and Drug Administration 
Office of Criminal Investigations

 


 

 

             U.S. Department of Justice Press Release

 

 

For Immediate Release
August 30, 2010

 

 

U.S. Department of Justice

The United States Attorney's Office

District of Colorado

First Assistant David M. Gaouette 

DENVER – Three former executives of a Colorado Springs medical equipment manufacturing company and a company representative have been named in a twelve count indictment charging conspiracy, false statements, importation violations, introduction of adulterated and misbranded medical devices and receipt of adulterated and misbranded medical devices, the United States Attorney’s Office and the Food and Drug Administration Office of Criminal Investigations announced today.  Arrests started this morning.  Once arrested, defendants will appear in federal court in the districts in which they were arrested for initial appearances.

According to the indictment, the FDA has the legal responsibility to clear or approve medical devices for each intended use prior to being distributed within the United States.  Spectranetics (SPNC), was a Colorado corporation that manufactured medical lasers and related devices, including catheters, that serve as intravenous sleeves that contain lasers.  Physicians used the lasers to perform atherectomies, a procedure that removes plaque buildup from arteries or vein grafts in order to ease blood flow. 

George John Schulte, age 62, of Wellesley, Massachusetts, was the Chief Executive Officer of SPNC.  Obinna Adhigije, aka Larry Adighije, age 50, of Encinitas, California, was the Vice President of Business Development for SPNC. Trung Pham, age 37, of Colorado Springs, was a Business Development Manager at SPNC.  Pham reported to Adighije and Schulte.  Hernan Ricaurte, age 41, of Ladera Ranch, California, was a representative of BAC, a Florida corporation contracted by SPNC to identify potential sourcing partners for the company’s medical products.

From January 2004 through October 2008, the indictment alleges that the defendants conspired with each other and others not named to obstruct and defeat the law function of the FDA and U.S. Customs and Border Protection, specifically the inspecting, taxing, evaluating and clearing of medical devices imported into the United States.

As part of the conspiracy, the defendants allegedly imported medical devices into the United States by false declarations regarding the description, value or uses for the devices.  The defendants then introduced and delivered for introduction medical devices for use in humans that were adulterated and misbranded in that they were not approved nor cleared by the FDA, nor exempt from approval or clearance, thereby defeating the lawful government function of the FDA.  Further, the defendants allegedly unlawfully promoted the medical devices for unauthorized uses, and concealed their conduct from internal investigators at SPNC and investigators from the FDA and Department of Homeland Security.

Spectranetics previously paid $5,000,000 in a civil and criminal matter related to this case.  They are also subject to an agreement with the government that requires the company’s continued cooperation.

“Today’s indictment sends a clear message that the FDA will investigate those individuals who jeopardize the public health by importing and distributing unapproved and uncleared medical devices to U.S. consumers,” said Patrick J. Holland, Special Agent in Charge, FDA – Office of Criminal Investigations, Kansas City Field Office.  “The Office of Criminal Investigations thanks the U.S. Attorney’s Office and our law enforcement partners for their thorough investigation and prosecution of this matter.”

The penalty for count 1, conspiracy, is not more than 5 years imprisonment, and up to a $250,000 fine.

The penalty for count 2, making false statements, is not more than 5 years imprisonment, and up to a $250,000 fine.

The penalty for counts 3 and 4, receipt of merchandise brought into the United States contrary to law, is not more than 20 years imprisonment, and up to a $250,000 fine.

The penalty for count 5, receipt of merchandise brought into the United States contrary to law, is not more than 20 years imprisonment, and up to a $250,000 fine.

The penalty for counts 6 and 7, introduction into interstate commerce of an adulterated and misbranded medical device – FMD Guidewires, is not more than 3 years imprisonment, and up to a $10,000 fine.

The penalty for counts 8 and 9, receipt in interstate commerce of an adulterated and misbranded medical device and delivery or proffered delivery for pay or otherwise – FMD Guidewires, is not more than 3 years imprisonment, and up to a $10,000 fine.

The penalty for count 10, introduction into interstate commerce of an adulterated and misbranded medical device – BMT PTA Balloons, is not more than 3 years imprisonment, and up to a $250,000 fine.

The penalty for counts 11 and 12, receipt in interstate commerce of an adulterated and misbranded medical device and delivery or proffered delivery for pay or otherwise, is not more than 3 years imprisonment, and up to a $100,000 fine.

George Schulte is named in counts 1 through 12 of the indictment.

Obinna Adighije is named in counts 1, 5, 10, 11, and 12 of the indictment.

Trung Pham is named in counts 1, 5, 10, 11, and 12 of the indictment.

Hernan Ricaurte is named in counts 1, 3, 4, 6, 7, 8 and 9 of the indictment.

This case was investigated by FDA Office of Criminal Investigations, and U.S. Immigration and Customs Enforcement (ICE).

The defendants are being prosecuted by Assistant U.S. Attorney Jaime Pena.

The Department of Justice’s Civil Division Office of Consumer Litigation assisted with the investigation.These charges are only allegations and the defendants are presumed innocent unless and until proven guilty.