March 20, 2019
Dallas lab owners admit to multi-million-dollar scheme to fraudulently sell dietary supplements
USP Labs’ sales pitch got customers’ attention: The Dallas company sold products developed by “the world’s top pharmacists & scientists;” dietary supplements that were derived from natural ingredients like geraniums. But they were in fact dangerous synthetic stimulants made in Chinese chemical factories, according to prosecutors. Nevertheless, the company’s executives marketed their products as safe, even though in private they talked about the dangers. The CEO referred privately to one of their controversial ingredients — known as DMAA — as a “questionable powder,” court records show. The products flew off the shelves and netted the owners over $230 million, the feds say. USP Labs and its owners were charged in 2015 in an 11-count indictment. On the eve of trial last week, the last of seven defendants pleaded guilty. Cyril Willson, 38, of Ralston, Neb., and Matthew Hebert, 40, of Dallas, admitted to introducing misbranded food into interstate commerce with the intent to defraud or mislead. The $46 billion supplement industry in the U.S. is booming. About 75 percent of Americans use them. As a result, product safety remains a top concern of federal regulators and health officials, and USP Labs was one of the government’s top targets. It was among more than 100 supplement makers and marketers that federal authorities sued and indicted in a 2015 nationwide sweep. The recent plea agreements came after U.S. District Judge Sam A. Lindsay denied defense motions seeking to suppress some government evidence. It is unclear whether the pleas might also have had something to do with new evidence the government said in court documents it planned to introduce. Prosecutors said it showed that some of the defendants have a history of smuggling illegal substances and tried to intimidate witnesses. Patrick R. Runkle, a trial attorney with the Justice Department’s consumer protection branch, said in a February court filing that evidence of the defendants’ prior bad acts was relevant because it showed their “knowledge, plan and absence of mistake” in the USP Labs case.
Most of the defense attorneys either could not be reached or declined to comment. But they said in legal filings that there is “no meaningful scientific evidence” that DMAA is unsafe, and they noted it wasn’t a banned substance at the time. They asked the judge in late February to bar the government’s new evidence of prior acts, arguing that it was unfairly prejudicial, irrelevant and “almost certain to waste the court’s time with mini-trials” about products and ingredients not in the indictment. But before Lindsay could rule, the defendants pleaded guilty. “We are extremely happy that USP Labs will no longer be in business. That was extremely important to us,” Leanne Sparling, whose son died in 2011 after taking one of the company’s supplements, said Friday. But she added, “No matter what, it does not bring back Michael.” Sparling, a California real estate agent, had testified during a civil case that an Army doctor told her that Jack3d, a USP Labs supplement, caused her son’s death. She said her son was taking the supplement to get stronger while in the Army and believed it was completely natural. Michael Sparling, a 22-year-old private, collapsed after running and went into cardiac arrest at an Army medical center in El Paso, reports said.
Lies and fictionUSP Labs’ top-selling products from 2009 to 2013 — Jack3d and OxyElite Pro — contained DMAA, which authorities said resulted in a rash of liver injuries. At least one other person died after taking the products. When the “outbreak of injuries” was reported in 2013, the company rushed to sell its remaining inventory before substituting DMAA with different ingredients, prosecutors said. USP Labs claimed those new ingredients came from trees native to India and the pulverized roots of a Chinese herb, but the government says they were also unsafe and mislabeled. USP Labs’ owners hid this from the public and from federal regulators by falsifying import documents, ingredient names, labeling and other information about their products, prosecutors said. Defense attorneys had argued that there is “no reliable evidence linking DMAA to injury.” They also said DMAA does, in fact, occur naturally in geraniums. They lined up experts who they said were prepared to testify that the substance was not responsible for certain reported injuries. The U.S. attorney’s office said it planned to call victims who would testify that USP Labs’ products gave them liver injuries. Scott Bass, a lawyer and supplement regulation expert who has authorized books on the topic, called the USP Labs outcome “extremely significant” because it shows that federal authorities are taking the matter of safety seriously. “This is a good shot in the arm for that effort,” he said. It also sends a message to other supplement companies to be careful about how they market their products, Bass said. “There is a lot of gray area that some companies take advantage of,” he said. According to the government’s new evidence, lab founder and owner Jacobo Geissler previously smuggled and sold anabolic steroids and other illegal substances from China. Some of the ingredients for USP Labs’ illegal products came from “Geissler’s illegal steroid and black-market Cialis suppliers in China,” Runkle said.
Geissler created a fiction about his background and qualifications, Runkle said. The “top sports scientists” Geissler supposedly worked with, for example, were actually illegal steroid “enthusiasts,” the prosecutor wrote.
The indictment quotes some of Geissler’s emails, one of which said to a Chinese chemical supplier, “Please use fake COA,” referring to a certificate of analysis. Sitesh Patel is a former pharmacist and executive with S.K. Laboratories, a California business that manufactured USP Labs products. Court documents show that Patel said this to his co-defendants in an email about DMAA in their products: “lol stuff is completely 100% synthetic.” He was convicted in 2017 of taking part in a different supplement scam in a Virginia federal court. Patel, who surrendered his pharmacy license, sold synthetic steroids as dietary supplements in that case, court records say. He had raw powder from China delivered to his home, Runkle said, and sold it to criminals for cash in a mall parking lot. “In reality, as Geissler and USP Labs knew, Patel was not a ‘top’ pharmacist and should not have been a pharmacist at all,” Runkle said in his filing. Jonathan Doyle, another USP Labs founder and owner, previously wrote about his plans to sell a synthetic steroid that he called Monster-Drol. He wrote a fake backstory of how the active ingredient was “discovered in a remote town in India,” according to court documents. A file taken from his seized computer spelled out his idea: “A plant (insert name here) found in a small village/town (maybe put a name here?) in India has gained a reputation as being an effective treatment…Outside of this village/town, the plant is never used or is very rare (something along those lines).”
Runkle said the document’s “fill in the blank” style is similar to how USP Labs promoted its products. Willson, a USP Labs consultant, wrote online articles “advocating the use of steroids” and minimizing their risks, according to Runkle. The articles, published between 2000 and 2006, claimed among other things that “synthetic substances are better than natural extracts,” the government’s filing says. The prosecutor said Geissler first contacted Willson because he was a “fan” of his writings. Willson used a fake name while posing as a scientific adviser for USP Labs, Runkle said. “The articles tend to show that Willson, USP Labs’ sole scientific adviser, was not a ‘top sports scientist’ as described to retailers and consumers in advertisements, but rather was an illegal anabolic steroid enthusiast with frightening fringe views about supplement safety,” Runkle wrote.
IntimidationRunkle said in his February filings that some defendants tried to silence potential witnesses. A government witness said that in mid-2018, a few months before a previous trial date in the USP Labs case, a “physically imposing man” appeared at her front door. The man said he had come on USP Labs’ behalf to speak with her. When she declined, the man “parked across the street from her house for several hours.” The witness, who had sold USP Labs products, said she felt “startled and intimidated by the incident,” Runkle said in his filing. Runkle also said Geissler engaged in “intimidating conduct” toward two people. In July 2015, Geissler tugged at a man’s shirt and asked if he was wearing a wire after the man mentioned the government’s investigation, Runkle’s court filings say. Around the same time, Geissler talked about a “piece of potentially embarrassing personal information” about a witness and said it was good to have in case the witness “turns on us,” the filings day. Runkle said the evidence illustrates Geissler’s knowledge and intent. Sentencing dates in the case are scheduled for later this year.
Guilty pleasJonathan Doyle, 40, of Dallas, the president of USP Labs, pleaded guilty Feb. 21 to conspiracy to introduce misbranded food into interstate commerce. He faces up to five years in prison. Sitesh Patel, 35, of Irvine, Calif., former pharmacist and vice president of S.K. Laboratories, pleaded guilty on Feb. 25 to conspiracy to introduce misbranded food into interstate commerce and to the introduction of misbranded food into interstate commerce. He faces up to six years in prison. Jacobo Geissler, 42, of University Park, the CEO of USP Labs, pleaded guilty on Feb. 28 to conspiracy to introduce misbranded food into interstate commerce. He faces up to five years in prison. Cyril Willson, a USP Labs consultant, and Matthew Hebert, a USP Labs co-owner, face up to three years behind bars. Hebert’s lawyer, Cass Weiland, said his client was “the graphics guy” who “made labels and ran them past the lawyers.”
Federal authorities also convicted a Chinese national accused in a separate indictment of shipping illegal substances to USP Labs. Xu Jia Bao was arrested at a Las Vegas trade show and charged with smuggling a banned product into the U.S. to be used in dietary supplements. The feds used an undercover sting operation to bust him. He pleaded guilty and had been scheduled to testify against USP Labs about how he sold DMAA to the Dallas company. As part of the plea bargains, the defendants agreed to pay about $60 million in fines and forfeitures. https://www.dallasnews.com/news/crime/2019/03/18/dallas-lab-owners-admit-multi-million-scheme-fraudulently-sell-dietary-supplements