May 26, 2016: Owner of “The Wholesale Source” Convicted for Selling Unsafe Dietary Supplements Online
ATLANTA - Chenhsin Chan, a/k/a Paul Chan, has been found guilty of 30 felony counts following a three-day jury trial, in connection with his online marketing and sale of dietary supplements containing ephedrine in violation of a federal ban.
“Ephedrine has been banned for use in dietary supplements for over a decade now,” said United States Attorney John Horn. “Chan, however, continued to market and sell unlawful products to online customers, exposing them to an unreasonable risk for illness or injury. He willfully broke the law, and his conviction should send a message to those who seek to endanger the online marketplace with unsafe products.”
“This verdict emphasizes that criminals selling unsafe, adulterated dietary supplements to American consumers will be held accountable for their actions,” said Robert J. West, Special Agent in Charge, United States Food and Drug Administration (“FDA”) Office of Criminal Investigations’ Miami Field Office. “The FDA will continue to pursue and bring to justice those who place profits above the public health.”
According to U.S. 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[external link] andwww.ephedrawholesale.com[external link]. From at least July 2005 through August 2012, Chan marketed and sold dietary supplements on his websites that contained ephedrine alkaloids. 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.
Chenhsin Chan, a/k/a Paul Chan, 44, of Elmhurst, New York, 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.
In addition to its guilty verdict on the charges, the jury also criminally forfeited assets the defendant purchased with proceeds from the 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, as well as over $666,000 in proceeds from the crimes.
Sentencing for Chan has not yet been scheduled.
This case is being 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 are prosecuting the case.
For further information please contact the U.S. Attorney’s Public Affairs Office atUSAGAN.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.