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Carolina Liquid Chemistries, Inc., Sentenced to Pay $50,000 for Developing and Marketing Drug Tests Without FDA Approval

OCI BadgeDepartment of Justice
U.S. Attorney’s Office
Northern District of California

Wednesday, December 4, 2019

SAN FRANCISCO – Carolina Liquid Chemistries, Inc. (CLC), was sentenced today to pay $50,000 for selling adulterated medical devices, announced United States Attorney David L. Anderson and Food and Drug Administration-Office of Criminal Investigations (FDA-OCI) Special Agent in Charge Special Agent in Charge Los Angeles Field Office Lisa Malinowski.  The sentence was handed down by U.S. Magistrate Judge Joseph C. Spero.  Magistrate Judge Spero also ordered CLC to serve a two-year period of probation during which time CLC will be required to develop and submit to the court an effective compliance and ethics program.

CLC, based in Winston-Salem, North Carolina, and Brea, Calif., pleaded guilty to the charge on September 3, 2019.  According to the plea agreement, CLC admitted that it developed systems for testing human urine for drugs of abuse and then, from 2010 to 2014, marketed the systems, all without FDA approval. 

“FDA's device approval requirements are designed to ensure the safety and effectiveness of devices used by Americans,” said Special Agent in Charge Malinowski. “Today’s announcement serves as a reminder of the FDA’s continued focus on taking action against companies that put profits ahead of the public health.”

CLC admitted that it purchased devices, referred to as reagents, from a company in the Northern District of California, and that it purchased automated photometric chemistry analyzers from a Japanese company and a Chinese company.  CLC admitted that it combined the reagents with the chemistry analyzers and then marketed the combined test system as a product for testing human urine for drugs of abuse.  CLC acknowledged that such a test system required approval by the FDA before being marketed, and that, to obtain approval from the FDA, the sponsor of an application to the FDA for approval would need to demonstrate that there were specific medical indications for which these devise were useful and that the test systems could safely and effectively perform these analyses.  CLC admitted it did not file for FDA approval for its system.

CLC was charged by an information on August 26, 2019.  The company was charged with one count of marketing adulterated medical devices, in violation of 21 U.S.C. §§ 331(a) and 333(a)(1).  CLC pleaded guilty to that charge. 

In addition to the $50,000 fine and the order to develop a compliance and ethics program, Magistrate Judge Spero’s sentence included additional terms that CLC must follow during the two-year probation period.  Among the terms of probation CLC must follow are: (1) to refrain from committing another federal, state, or local crime; (2) to notify the court or probation officer immediately upon learning of any civil litigation, criminal prosecution, or administrative proceeding against the organization; and (3) to submit to unannounced examinations of its books and records by the probation officer or experts engaged by the court. 

This case is being prosecuted by the Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District in California.  The prosecution is the result of an investigation by the FDA-OCI with assistance from the Federal Bureau of Investigation and the U.S. Department of Health and Human Services Office of the Inspector General.

Further Information:
Case #: CR 19-406 JCS
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.

Judges' calendars with schedules for upcoming court hearings can be viewed on the court's website at www.cand.uscourts.gov

All press inquiries to the U.S. Attorney's Office should be directed to Abraham Simmons at (415) 436-7264 or by e-mail at Abraham.Simmons@usdoj.gov

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