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Diet Supplement Maker Gets Jail for Selling Illegal Rx Drug

Feb 3, 2009 | Parker Waichman LLP

A notorious supplement maker gets jail time and hefty fines for hawking counterfeit prescription drugs, but is not charged for blackmail and murder conspiracies, reported Natural Products Insider.  Jared Wheat, the CEO and founder of Hi-Tech Pharmaceuticals was charged $50,000 and sentenced to 50 months in prison for illegally selling prescription drugs online, said Natural Products Insider.

MSNBC reported that one of Wheat’s co-defendents, Sergio Oliveira, a sales associate with the company, was sentenced to 20 months in prison and fined $20,000.  Also, two Hi-Tech officials received sentences as part of a prior plea deal:  Stephen D. Smith for 27 months and Tomasz Holda, for 16 1/2 months.  Holda will serve his sentence consecutively for time he is currently serving for a federal firearms offense.

The judge also ordered Wheat and his co-defendants to return $3 million in proceeds, said Natural Products Insider, which reported that the judge rejected the 37 months suggested as part of a plea deal for Wheat.  According to MSNBC, U.S. District Judge, Jack T. Camp, said that the proposed sentence was not adequate for the ”seriousness of the conduct.”  Prosecutors ultimately dropped a variety of other charges including racketeering, blackmail and murder conspiracies, and for spiking supplements with ephedrine alkaloids, as part of the plea deal, said Natural Products.  The U.S. Food and Drug Administration (FDA) banned ephedrine alkaloid use in 2004 after finding that substance presented “an unreasonable risk of illness or injury.”

Also as part of the plea, said MSNBC, the defendants admitted to operating a manufacturing facility—described as filthy—in Belize in which they produced generic versions of a variety of medications such as Xanax, Valium, Ambien, Vioxx, Zoloft, Viagra, and Cialis, which they ultimately sold over the Internet without requiring prescriptions.

The case was originally reported in 2007 by MSNBC when prosecutors accused Wheat of conducting a “continuing criminal enterprise,” which according to MSNBC is a racketeering statute more commonly used in organized crime cases.  That charge could have landed Wheat in prison for no less than 20 years and would have cost Wheat his company; however, the charge was dropped during plea talks, reported MSNBC.  Last week, the judge provided the defendants with the choice to either take the case to trial or to accept his sentencing.

Apparently, reported MSNBC, Wheat, Smith, and Holda conspired to murder an FDA agent and to blackmail a former assistant U.S. attorney general.  And, while the allegations were made based on information provided by confidential informants, the charge was dropped in plea bargaining talks.

Hi-Tech Pharmaceuticals’ products are sold in a wide variety of major American retailers and even more convenience stores.  Hi-Tech’s most popular products include Stamina-Rx, which it describes as a "maximum sexual stimulant," Lipodrene, "for advanced appetite control and metabolic stimulation," and Metanabol, a "revolutionary catalyst for increasing lean mass and strength," quoted MSNBC.

David E. Nahmais, the U.S. attorney for Georgia’s northern district, said, reported MSNBC, that Wheat and his co-defendants, because of their “greed, pure and simple,” subjected consumers to myriad health risks.  Nahmais noted that the group also violated drug patents.  Hi-Tech Pharmaceuticals is located in Georgia.


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