Office of Criminal Investigation 2002
In fiscal year 2002, the efforts of FDA's Office of Criminal Investigations (OCI) resulted in 372 arrests and 317 convictions for violations of the Federal Food, Drug, and Cosmetic Act and related statutes. Additionally, these criminal investigations resulted in $24,027,549.00 in fines/restitution and $18,300,000.00 in forfeitures.
Center for Devices and Radiological Health
Unapproved Device Promoted for Carpal Tunnel Syndrome
Defendants Ordered to Pay $211,102.30 in Restitution
On January 4, 2000, FDA's Office of Criminal Investigations (OCI) Special Prosecutions Staff received information that a firm called Para Tech Industries (Para Tech), located in Dayton, Ohio, was shipping unapproved medical devices into interstate commerce. Para Tech was shipping these devices to various chiropractic clinics in the New York regional area. The information was uncovered in a health fraud investigation conducted by the Federal Bureau of Investigation (FBI). The device in question was the CTD Mark I promoted for use in the treatment of Carpal Tunnel Syndrome without FDA approval.
In January of 2002, OCI conducted numerous interviews in Dayton, Ohio, of witnesses in this investigation. The witnesses were primarily former employees of Para Tech. The subjects of the investigation were Paul F. Fulk, President of Para Tech and Earnie S. Philbot, Vice President of Para Tech. Fulk was also the President and Chief Executive Officer of Therasys, Inc. Philbot was the Vice President, Secretary, and Treasurer of Therasys, Inc. The company, Therasys, Inc., is a related company incorporated in the State of Florida. Para Tech was incorporated in the State of Ohio.
Based on information developed through interviews of former Para Tech employees, Fulk and Philbot were indicted on February 16, 2000, by a Grand Jury in White Plains, New York. Both individuals and both entities were indicted on the following charges:
- Count 1: Conspiracy to Defraud the FDA [18 U.S.C. § 371].
- Count 2 through 18: Shipments of Adulterated Devices into Interstate Commerce,
[21 U.S.C. §§ 331(a), 333 and 352, 18 U.S.C. § 2].
- Counts 19 through 35: Mail Fraud (Shipping Adulterated Medical Devices through the U.S. Mail and or other Commercial Carrier) [18 U.S.C. §§ 1341 and 2].
On February 23, 2000, Fulk and Philbot surrendered to U.S. Marshals in White Plains, New York. They appeared before U.S. Magistrate Judge George Yanthis in the Southern District of New York and pled "Not Guilty" to all of the above mentioned charges. Fulk also pled "Not Guilty" on behalf of Para Tech and Therasys, Inc.
On April 12, 2000, attorneys for Fulk, Philbot, Para Tech Industries and Therasys, Inc., met with prosecutors and agents at the United States Attorney's Office in White Plains, New York. During the meeting, the prosecutor presented the defense attorneys with all of the evidence developed against their respective clients.
Subsequently, on June 29, 2000, Fulk and Philbot signed plea agreements. Fulk was convicted of 18 U.S.C. §§ 371 and 1505, Conspiring to Obstruct the Proceedings of the FDA. Fulk admitted to being the leader and organizer in the aforementioned criminal activity. Philbot was convicted of the same charges as Fulk, but he did not admit to being the leader or organizer. The FDA proceedings that the defendants obstructed were FDA inspections conducted by the FDA's Cincinnati District Office in December of 1994 and December of 1995. During those inspections, Fulk and Philbot provided false and misleading information during those inspections.
On March 3, 2002, Chief Justice Walter Herbert Rice of the Southern District of Ohio in Dayton, Ohio, sentenced Fulk, Philbot, Para Tech, and Therasys, Inc., to the following:
- Fulk was sentenced to 12 months incarceration with work release and 3 years supervised probation.
- Philbot was sentenced to 3 years probation and 6 months home confinement (1st 3 months to be electronically monitored).
- Para Tech and Therasys, Inc., were each ordered to pay a total of $211,102.30 in restitution to 24 chiropractors who bought the CTD-Mark I devices believing that it was an FDA approved device.
Magnet Promoted to Cure Cancer
Investigation Discloses that Cancer Victims Invested $675,000. for Fraudulent Magnetic Device
This case originated on January 18, 1996, upon referral from the Tennessee Health Related Board contacted FDA following a physician's complaint. The physician stated that James Gary Davidson of the Macrotech Corporation, Paris, Tennessee, was claiming to have developed a "curative" cancer treatment based on a device utilizing magnets. FDA's Office of Criminal Investigations (OCI), FDA's Nashville Branch, Internal Revenue Service Criminal Investigation, U.S. Postal Inspection Service and the Federal Bureau of Investigation, conducted a joint investigation.
The primary false representation made to cancer victims and their families was that a magnetic ring device, through which the patients were passed, was capable of exploding or imploding cancer cells and thereby curing cancer. Investments in the amount of $675,000 in the purported medical technology were made by cancer patients, their families and others. Treatments with essentially the same device were also falsely represented to be cures or highly effective treatments for multiple sclerosis, arthritis, muscular dystrophy, Alzheimer's, emphysema, coronary heart disease and AIDS, among others.
James Gary Davidson falsely represented himself as having a doctorate degree in nuclear physics from Karl Marx University in Leipzig, Germany, and as being a former Central Intelligence Agency agent. Davidson had previously been convicted in 1994, of felony securities fraud violations in Illinois in connection with defrauding investors in a fuel scheme.
On March 4, 2002, Davidson was convicted of one count of mail fraud and one count of money laundering. Davidson admitted that he devised a scheme to defraud and obtain money by false pretenses from various persons interested in a cancer treatment, knowing full well these representations were false when he made them. Davidson also admitted that he misrepresented his education and background by falsely stating he obtained a doctorate degree in physics and stating he had worked for the Central Intelligence Agency. As part of his scheme, Davidson led individuals to believe they were free of, or had been "cleared" of cancer.
On September 13, 2002, James Davidson was sentenced in the U.S. District Court to seven years and four months incarceration. During the proceedings, James Davidson paid restitution to a number of named victims totaling $675,000.
In sentencing Davidson, the Judge stated that Davidson's crime was exceptionally cruel because although his claims were unbelievable, his victims were desperate people looking for hope.
Physician Sentenced for Use of Silicon and Mineral Oil Injections
Mexican Physician Convicted for Fraud - Order to Pay $17,000. In Restitution
The FDA's OCI and the Federal Bureau of Investigation (FBI), in McAllen, Texas, initiated an investigation into the use of silicon and mineral oil injections for cosmetic purposes by a Mexican physician practicing medicine in the United States. The investigation disclosed that Dr. Rosa Nunez, a licensed physician only in Mexico, was traveling from Mexico to the United States to perform cosmetic procedures on a number of women. Nunez was performing injections for fuller lips, buttocks and calves. As a result of the injections, many of the women experienced disfiguration at the injection and swollen ankles that had hardened.
As part of the investigation, several undercover meetings were set up between a female FBI agent and Nunez. During these meetings, Nunez agreed to inject the calves and lips of the undercover agent and her friend with silicon. Nunez was charging between $3,000 and $5,000 for these treatments.
Incident to a meeting at a hotel room, Nunez and her two assistants were arrested and several vials of a biopolymer (silicon) solution were seized along with two large unmarked bottles which analysis confirmed to contain mineral oil.
This case went to trial and the witnesses/victims and both of Nunez's assistants testified that Nunez was using the biopolymer (silicon) in the lips, but injecting the bottles identified as mineral oil into the calves and buttocks. A witness from the FDA's Forensic Chemistry Center testified to the identity of the substances and a witness from the FDA's Center for Devices and Radiological Health (CDRH) testified that the use of mineral oil and silicon are not approved by the FDA for cosmetic purposes, and that the injection of these substances was considered to be adulterated devices. At the conclusion of the trial Nunez was convicted of 18 U.S.C. § 1343 -- Wire Fraud, and 18 U.S.C. § 371 -- Conspiracy.
On October 15, 2002, Nunez was sentenced in McAllen, Texas, to serve 22 months incarceration in a federal correctional institution and ordered to pay $17,000 in restitution to her victims.
One of Nunez's assistants, Maria Flores, was convicted of one count of 21 U.S.C. § 331(a), Introduction into Interstate Commerce of an Adulterated Device.
Physician Submits False Information to FDA
Physician Falsely Presents Himself as Qualified to Interpret Mammograms
This investigation was initiated based on a referral from the FDA's Los Angeles District Office. The District received information from the Los Angeles County Department of Health Services, Radiation Management. The Los Angeles County Department of Health Services, Radiation Management (LA Radiation Management) are FDA contract inspectors utilized to certify mammography facilities under the Mammography Quality Standards Act, 42 U.S.C. 262.
An inspection conducted at Medical Diagnostic Incorporated, Huntington Park, California, by the LA Radiation Management identified quality assurance issues and suspected fraudulent documentation submitted to substantiate that a physician, Terry Alan Dichter, M.D., as being qualified to continue to interpret mammography by his education, background and experience.
The information provided by Dichter to the LA Radiation Management included a list of mammography cases he purportedly interpreted, a letter of verification with signature of Dichter's former employer for that number of mammography cases interpreted and copies of University of Southern California (USC) School of Medicine certificates for purported continuing medical education courses attended.
The investigation revealed that the list of mammography cases interpreted and the USC School of Medicine continuing medical education certificates were fraudulent. A forensic document examination of the letter of verification and signature by the United States Secret Service determined that Dichter authored the fraudulent document and signature.
On December 29, 2000, Dichter's California Medical License was revoked. On October 24, 2001, Dichter agreed to waive indictment and was convicted of a one count Information that charged him with violation of 18 U.S.C. § 1001 False Statements. The specific charge involved Dichter knowingly providing false written statements to support the false claims he made to FDA relative to his education, experience and background.
On January 14, 2002, Dichter appeared in U.S. District Court, Los Angeles, California, and was arraigned on the one count Information. Dichter was released on a ten thousand dollar appearance bond.
On June 11, 2002, in the Central District of California, Dichter was sentenced to 10 months incarceration, 5 months in a Bureau of Prison facility, 5 months home detention with electronic monitoring, and 36 months supervised release following the completion of his term.