Chapter 6

Office of Criminal Investigation continued

Center for Drug Evaluation and Research cont.

Viagra and Anabolic Steroids Sold With No Prescription

This investigation was initiated upon information regarding an Internet site operated by Jason Reklaitis under the name of Big Man’s Pharmacy. Investigation revealed that from about December 1999 to April 2000, Reklaitis was selling prescription drugs, such as Viagra and anabolic steroids, without a prescription or online physician consultation, in violation of Title 21 U.S.C. § 331, 333(a)(2), and 351, as well as § 21a-277(B) of the Connecticut General Statutes. Reklaitis only accepted cash or money orders as payment for the drugs.

On February 28, 2001, Reklaitis was convicted in Connecticut Superior Court, Rockville, Connecticut, of possession with the intent to sell controlled substances in violation of § 21a-277(B) of the Connecticut General Statutes.

On March 30, 2001, Reklaitis was sentenced to serve 2 years in prison.

Unapproved New Drug (LK-200) Promoted for Treatment of Cancer

This investigation revealed that between 1993 and 1995, T. Ronald Theodore and Thomas Rodgers solicited approximately $2 million of investments in a company called Private Biologicals Corporation (PBC) by claiming that they had invented a promising new drug (LK-200) for the treatment of cancer. Investors were told that because the FDA had not yet approved the drug, PBC manufactured the drug overseas (Bahamas) using a highly proprietary method of production. At the same time, Theodore held himself out as an M.D., even though he had neither a legitimate medical degree or college degree.

The investigation showed that PBC did not file an Investigational New Drug Application with the FDA, and that the LK-200 being produced by PBC was neither proprietary nor was it invented by Theodore and Rodgers. In reality, it was a substance that was well known and widely published. The LK-200 was being manufactured in Woburn, Massachusetts, in a facility not registered with the FDA, under conditions that did not meet FDA standards. It was packaged and shipped in unsanitary conditions that exposed it to contamination.

In order to disguise its place of manufacture, Theodore initially shipped the LK-200 to the PBC facility in the Bahamas, for re-shipment back into the U.S. As that process became cumbersome and expensive, Theodore began shipping LK-200 directly from Woburn, MA to various purchasers in the U.S., while falsifying the shipping labels to reflect a Bahamas shipping address.

Tom Rodgers and T. Ronald Theodore were indicted on nine counts of violating Title 18 U.S.C. § 1341 - mail fraud, and one count each of Title 21 U.S.C. § 331 (a) - shipping an adulterated drug, Title 21 U.S.C. § 331 (d) - shipping an unapproved drug, and Title 21 U.S.C. § 331 (p) - operating an unregistered drug facility.

Rodgers was convicted of the FDA charges and was sentenced to one-year probation and ordered to pay a $10,000.00 fine.

On March 12, 2001, a federal jury in U.S. District Court, Boston, Massachusetts, upon hearing evidence for four weeks, convicted Theodore of nine counts of mail fraud and all three FDA violations. Theodore awaits sentencing.

Trafficking in Unapproved Foreign and Expired Medications

This investigation was initiated at the request of the Office of the United States Attorney, District of Puerto Rico, upon receipt of complaints that Dr. Benjamin Garcia was selling prescriptions for legend and scheduled medications. These prescriptions were issued without the benefit of a medical examination or physician to patient relationship. The ensuing investigation determined that Garcia was also trafficking in unapproved foreign medications and expired medications. On six occasions, Garcia sold prescriptions to undercover OCI Task Force Agents.

A search warrant executed at Garcia’s medical office produced records reflecting several thousand prescriptions issued without supporting patient records. A review of these prescriptions and other investigative activities revealed that Pablo Diaz had received several hundred prescriptions from Garcia, made out in the names of deceased patients at a local hospice. Diaz filled the prescriptions and either consumed the controlled medications himself or sold them to other addicted individuals.

On December 20, 2000, Dr. Benjamin Garcia was convicted in U. S. District Court, District of Puerto Rico, of violating Title 21 U.S.C., § 841, Trafficking In Controlled Substances. On July 7, 2001 Garcia was sentenced to serve 18 months in prison and ordered to forfeit his Puerto Rico license to practice medicine.

On July 7, 2001, Pablo Diaz was convicted in State Superior Court, Municipality of Carolina for the Commonwealth of Puerto Rico, of violating the Puerto Rico Narcotics Control Act. DIAZ was sentenced to serve twenty-four (24) months probation, pay a $1,500.00 fine, and was ordered to complete an in-patient narcotics detoxification program as a part of his probation.

Clinical Investigator Involved in Medicaid Fraud

This investigation was initiated upon a referral from the San Juan District Office whereby a routine inspection at the Centro Medico de Bayamon found strong indications that Caro Acevedo, M.D., a clinical investigator, was falsifying data in a new drug study. The new drug sponsor, in turn, unwittingly provided the falsified data to the FDA. The District Office further reported that Caro Acevedo was not adhering to the research protocol as well as numerous other violations. The subsequent criminal investigation confirmed the allegations raised by the District Office.

Independent of the false statements that Caro-Acevedo had caused to be filed regarding the aforementioned IND, the office of the United States Attorney’s Health Care Fraud Task Force requested FDA/OCI participation, along with the FBI and the U.S. Postal Inspection Service, in an unrelated investigation. This investigation centered on the activities of Eduardo Caro-Acevedo, M.D., Maxuel Genao-Encarnacion, M.D., involving a scheme to defraud the Medicaid system by providing less costly medications for hemophiliacs and billing Medicaid for the more expensive treatment. The investigation revealed that Caro-Acevedo and Genao-Encarnacion received kickbacks for prescribing the more expensive Medicaid approved medications, with the full knowledge that the patients received a less costly medication from the provider.

On February 16, 2001, Dr. Eduardo Caro-Acevedo was convicted in U.S. District Court for the District of Puerto Rico of Conspiracy, for violating Title 18 U.S.C. § 371. The offenses that this conspiracy charge was predicated upon related to Medicare/Medicaid fraud, false statements to the FDA, misbranded drugs in interstate commerce, and numerous other offenses.

On July 13, 2001, Caro Acevedo was sentenced to serve 24 months probation and ordered to pay a $10,000.00 fine. This conviction and sentence was the result of a plea agreement negotiated between the government and Caro-Acevedo in light of his deteriorating health.

On December 6, 2001, Dr. Maxuel Genao-Encarnacion appeared in U.S. District Court for the District of Puerto Rico, where he was convicted of violating Title 18 U.S.C. § 4, misprision of a felony, relative to his efforts to cover up Caro-Acevedo’S criminal activity involving Medicare/Medicare Fraud.

On July 27, 2001, Genao-Encarnacion was sentenced in US District Court to serve 3 months in prison and was ordered to pay a fine of $4,000.00.

Pharmacy Owner Involved in Medicaid Fraud

On October 16, 2001, Mercedes Sosa was sentenced in U.S. District Court for the Southern District of Florida, pursuant to a conviction for violating Title 21 U.S.C., § 331(t), unlicensed wholesale drug distribution, and Title 18 U.S.C. § 1347, health care fraud. Sosa was sentenced to serve 21 months in prison, 3 years probation, and ordered to pay $1,400,000.00 in restitution to the Florida Medicaid Program.

Undercover investigation revealed that Sosa, owner and operator of Krista Pharmacy, illegally distributed drugs from Krista Pharmacy, and billed the Florida Medicaid Program for drugs that were never dispensed to patients.

The Florida Office of Attorney General, Medicaid Fraud Control Unit also participated in this investigation.

Possession with the Intent to Deliver GHB

The FDA/OCI Chicago Field Office was requested to assist the Mount Prospect, Illinois, Police Department (MPPD) with an investigation concerning the manufacture/distribution of Gamma Hydroxybutyrate (GHB). Subsequent investigation identified Roland Kantor of Arlington Heights, Illinois, as a target and several undercover purchases of GHB were effected from Kantor.

During the investigation, surveillance was established on the residence of Kantor by MPPD and OCI. Eventually, Kantor was observed loading gallon-size containers into his vehicle, and departing his residence. Kantor was then stopped by the Buffalo Grove, Illinois, P.D., MPPD, and OCI agents and taken into custody. A search of Kantor’s vehicle revealed 5 one-gallon containers filled with GHB.

A subsequent search warrant executed at Kantor’s residence yielded approximately 4 more gallons of GHB. Additional items found included, precursor chemicals for the manufacture of GHB, 1,500-2,000 tablets of MDMA (Ecstasy), miscellaneous anabolic steroids, and syringes. Also, at the time of the search, two (2) other individuals were arrested by local authorities after arriving at the residence, one (1) for possession of marijuana, and the other for an outstanding warrant for Battery.

On April 10, 2001, Kantor appeared in Cook County Illinois Circuit Court where he was convicted of Possession with the Intent to Deliver GHB. On May 30, 2001, Kantor was sentenced to serve 7 years in prison.

Laetrile from Mexico Promoted as Cure for Cancer

This case originated upon information provided by the Nebraska Department of Health & Human Services. Investigation determined that Kenneth Michaelis, d/b/a Holistic Alternatives, Inc., in Ohio, was selling several forms of Laetrile from Mexico as well as hydrazine sulfate. These misbranded drugs were being promoted and sold as cancer cures. On October 4, 2001, Kenneth Michaelis and his company, Holistic Alternatives, Inc., appeared in the U.S. District Court in Columbus, Ohio. Michaelis was sentenced to 6 months of incarceration in a halfway house, one year of supervised probation including 6 months of home detention by electronic monitoring, and was ordered to pay a fine of $10,000.00. Holistic Alternatives, Inc., was sentenced to 3 years probation and fined $25,000.00.

On May 12, 2001, both defendants were convicted of a felony charge of distributing an unapproved drug, Laetrile, in interstate commerce in violation of Title 21 U.S.C. §§ 331(d) and 355 (a). Each defendant was also convicted of a misdemeanor charge of distributing a misbranded drug, hydrazine sulfate, in interstate commerce in violation of Title 21 U.S.C. §§ 331(a) and 333 (a) (2).

The FDA Cincinnati District Office and the FDA’s Office of Criminal Investigations conducted this investigation.

Tampering of Injectable Drugs

This investigation was initiated in March 2001 upon a request for assistance from the Anne Arundel County Police Department. The Anne Arundel Surgery Center in Annapolis, Maryland, reported a possible tampering of injectable drugs. Investigation revealed that on at least one occasion, Registered Nurse Karen Schmitt removed a syringe filled with Fentanyl from a surgical procedure room and injecting herself with the contents. Schmitt then attempted to return the syringe filled with water, to its original location.

On June 11, 2001, Karen Schmitt appeared in the District Court of Maryland for Anne Arundel County where she was convicted on two counts of Article 27, section 342, Theft under $300.00, and one count of Article 21, section 256, Adulteration of a Drug.

On September 18 2001, Schmitt was sentenced to serve one year in prison (suspended) and three years supervised probation, during which she will undergo psychiatric counseling and drug rehabilitation.

Illegal Importation of Human Growth Hormone

This case was initiated upon information alleging that Timothy Bassett was involved in the illegal importation of human growth hormone (HGH) into the United States. During 1998 and 1999, Bassett arranged for the importation of HGH manufactured in Lithuania, without screening, testing, or approval by the Food and Drug Administration. Bassett imported the HGH for personal use and distribution to others through his business, Life Extension Institute.

On August 21, 2001, Basset appeared in the U.S. District Court for the Eastern District of Virginia in Alexandria, Virginia, and was sentenced to six months of supervised probation for knowingly and willfully causing the introduction into interstate commerce of unapproved human growth hormone (HGH) in violation of Title 21 U.S. Code § 331(d) and 331(a)(1).

The Drug Enforcement Administration, the U.S. Customs Service and FDA’s Office of Criminal Investigations investigated this case.

Web Site Promoting Cure for AIDS, HIV, and Arthritis

This investigation was directed at the sale of an unapproved and misbranded drug, namely “EXP,” via a web site located at HOME.EARTHLINK.NET/~EXP7 operated by Steven Bruce Tondre. “EXP” was touted as useful in the cure and treatment of AIDS, HIV, and arthritis. Undercover purchases made during the conduct of the investigation were analyzed by the Forensic Chemistry Center (FCC) and determined to be similar in nature to drinking water.

On February 2, 2001, OCI agents along with U.S. Postal Inspectors executed a search warrant at the premises occupied by Tondre. Documents obtained during the conduct of this warrant revealed that Tondre had previously sold “EXP” as “colloidal silver.” The arrest of Tondre and search of his residence were reported in both print and television media in San Diego and Los Angeles Counties.

On July 9, 2001, Steven Bruce Tondre was convicted in the Central District of California on four misdemeanor counts of violating Title 21 U.S.C. §331(a), 333(a)(1) and 343 for the introduction into interstate commerce of a misbranded drug. Tondre had been previously indicted on April 4, 2001 in the Central District of California on five (5) counts of violating Title 18 U.S.C. §1341 - mail fraud, and four (4) counts of violating Title 21 U.S.C. § 331(a), 333(a)(2), 352(a), (b), (c), and (o) - the introduction into interstate commerce of a misbranded drug.

On December 10, 2001, Tondre was sentenced to 5 years probation and ordered to pay a fine of $4,000.00 and restitution in the amount of $12,044.00. The court also prohibited Tondre’s involvement in sales or solicitation for sale using the Internet, and ordered the installation of “computer cop” software to monitor Tondre’s online activity.

After reviewing the press releases and official publications by the FDA and FTC regarding the recent June 15, 2001 announcement concerning “colloidal silver” sales over the internet (published in the Wall Street Journal on June 14, 2001), the Office of the United States Attorney in Los Angeles decided that a felony disposition of this case would be inconsistent with the administrative settlements against larger Internet retailers of “colloidal silver” announced by the FDA and FTC. Accordingly, the USAO determined that based on Tondre’s actions and the fact other Internet retailers were able to obtain administrative settlements, the USAO would pursue a criminal conviction, albeit on a misdemeanor level.

Previous Page Next Page