ATLANTA - Chenhsin Chan, a/k/a Paul Chan, 44, of Elmhurst, N.Y., was sentenced to a prison term of 11 years, 3 months late Friday in connection with his online marketing and sale of dietary supplements containing ephedrine notwithstanding a federal ban. Chan was found guilty of 30 felony counts following a three-day jury trial in May 2016.
"Today’s sentence reflects the serious implications of distributing substances like ephedrine on the Internet. Not only was he selling unsafe products, but he was marketing them online with false and misleading statements about their legality and efficacy,” said United States Attorney John Horn. “We urge members of the public to do their homework before purchasing dietary supplements from any source, especially online."
"Distributing unlawful, adulterated dietary supplements fraudulently marketed and sold as ‘legal’ products place the U.S. public health at risk," said Justin Green, Special Agent in Charge, FDA Office of Criminal Investigations’ Miami Field Office. "We will remain vigilant in our efforts to protect American consumers from these fraudulent and potentially dangerous products."
According to United States Attorney Horn, the charges, and other information presented in court: Paul Chan owned and operated The Wholesale Source, LLC, a company that marketed and sold dietary supplements, primarily through affiliated websites including www.thatswholesale.com and www.ephedrawholesale.com. From at least July 2005 through August 2012, Chan marketed and sold dietary supplements that contained ephedrine alkaloids on his websites. In April 2004, the FDA published a final rule declaring dietary supplements containing ephedrine alkaloids to be adulterated because they present an unreasonable risk of illness or injury. Chan was warned by FDA investigators and others that it was illegal to sell dietary supplements containing ephedrine alkaloids, but he continued to do so.
Chan’s websites made materially false and misleading claims concerning the use of ephedrine, such as that ephedrine has been approved by the FDA for treatment of any disease, and that ephedrine has “never been illegal.” The jury found that these false and misleading claims were designed to lure customers into believing that it was legal to purchase adulterated dietary supplements containing ephedrine, when it was not. Chan sold over $4.5 million in dietary supplements with ephedrine alkaloids, including to customers in the Northern District of Georgia.
Chan was charged by a federal grand jury on May 29, 2014, with ten counts of mail fraud, ten counts of introducing adulterated food (namely, dietary supplements containing ephedrine alkaloids) into interstate commerce, five counts of knowingly distributing a listed chemical (namely, ephedrine) without obtaining the required registration, and five counts of money laundering. The jury rendered a guilty verdict on all thirty counts of the indictment.
United States District Judge Orinda D. Evans sentenced Chan late Friday to serve 11 years, 3 months in prison, followed by three years of supervised release. Judge Evans also entered a final order forfeiting Chan’s assets, which the jury found Chan had purchased with proceeds from his crimes, including real property in New York that had been purchased for $950,000, a Mercedes Benz purchased for over $50,000, and a Lamborghini Gallardo purchased for approximately $117,000. The Court also forfeited over $666,000 in cash.
This case was investigated by the FDA’s Office of Criminal Investigations. The Drug Enforcement Agency provided valuable assistance.
Assistant United States Attorneys Steven D. Grimberg and Kelly K. Connors prosecuted the case.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.