Dietary Supplement Makers Charged With Fraud And Conspiracy

The Department of Justice announced that it had brought criminal charges against dietary supplement manufacturer USPlabs and arrested several of the firm’s corporate officers. The Justice Department’s actions resulted from a yearlong effort, which focused on the dietary supplement market that is causing increasing concern among health officials across the United States.

Since November 2014, the Department of Justice (DOJ), the Food and Drug Administration (FDA), and other federal partners, including the Internal Revenue Service (IRS) and the Federal Trade Commission, have been pursuing civil and criminal cases against more than 100 manufacturers and marketers of dietary supplements.

The Department of Defense and the U.S. Anti-Doping Agency also participated in the sweep to unveil new tools to raise awareness and understanding of the risks that unlawful dietary supplements pose to consumers. The agencies’ primary focus and attention has been on assisting service members targeted by illegitimate athletic performance supplements.

In each case, the Justice Department, or one of its federal partners, alleges that a large number of companies are selling weight loss and dietary supplements that contain ingredients other than those listed on the product label. Additional accusations contend that companies are selling products that make disease treatment or health claims, though they lack verifiable scientific evidence and have no proof of the product’s effectiveness.

On Tuesday, an 11-count indictment was unsealed against USPlabs LLC, a Dallas firm, which formerly manufactured highly popular workout and weight loss supplements. USPlabs is known for its widely accepted and bestselling weight loss and workout supplements, sold under names like Jack3d and OxyElite Pro.

The indictment charges USPlabs and S.K. Laboratories Inc., based in Anaheim, California, and their operators with a variety of charges related to the sale of those products. Criminal charges — including various counts associated with the unlawful sale of dietary supplements — were brought against USPlabs CEO Jacobo Geissler, 39, president Jonathan Doyle, 37, Matthew Hebert, 37, and a number of others. Additionally, Geissler, Doyle and Hebert of USPlabs are charged with obstruction of an FDA proceeding and conspiracy to commit money laundering.

Four of the defendants were arrested on Tuesday, and the other two are expected to surrender to authorities. Along with the arrests, FDA and IRS-CI special agents seized assets in dozens of investment accounts, Texas real estate, and a number of sports and luxury cars.

A section of the indictment reads as follows:

“USPlabs engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling and then lied about the source and nature of those ingredients after it put them in its products.”

The indictment declares that USPlabs told some of its wholesalers and retailers that the dietary supplement manufacturer used natural plant extracts in products called Jack3d and OxyElite Pro, when in fact the company was using a synthetic stimulant manufactured in a Chinese chemical factory.

Allegations also include that USPlabs sold some of their products without determining whether they would be safe for consumers. In fact, the indictment noted, the defendants knew of studies that linked their products to liver toxicity. However, they sold them to consumers anyway.

Further allegations cited in the indictment allege that in October 2013, USPlabs and its principals told the FDA that it would stop selling of OxyElite Pro after the product was found to cause an outbreak of liver injuries.

However, despite the company’s promise, USPlabs engaged in a sneaky, “all-hands-on-deck effort to sell as much OxyElite Pro” as the company could and as quickly as possible. USPlabs actually sold the product as a dietary supplement in stores across the nation.

Deputy Commissioner Sklamberg noted how important this latest sweep is for consumers.

“This joint agency effort is a testament to our commitment to protecting consumers from potentially unsafe dietary supplements and products falsely marketed as dietary supplements. The criminal charges against USPlabs should serve as notice to industry that if products are a threat to public health, the FDA will exercise its full authority under the law to bring justice.”

Tuesday’s press release by the U.S. Department of Justice includes a comment made by Principal Deputy Assistant Attorney General Mizer concerning the recent criminal charges against the dietary supplement firms.

“The Justice Department and its federal partners have joined forces to bringing to justice companies and individuals who profit from products that threaten consumer health. The USPlabs case and others brought as part of this sweep illustrate alarming practices the department found—practices that must be brought to the public’s attention so consumers know the serious health risks of untested products.”

The allegation and charges in the indictments are accusations, and the defendants are presumed innocent unless and until proven guilty. Nevertheless, the FDA continues to warn consumers about the risks associated with some over-the-counter products, falsely marketed as dietary supplements, which contain hidden active ingredients that could be harmful.

In the last year, the government agency has warned consumers of more than 100 products found to contain hidden active ingredients. These products are often sold for weight loss, bodybuilding, and sexual enhancement. Buyer, beware!

[Photo Illustration by Christopher Furlong/Getty Images]