USPlabs LLC, Dallas, makers of workout supplements Jack3d and OxyElite Pro, faces criminal charges from the U.S. Justice Department for the unlawful sale of dietary supplements.
The Justice Department announced the charges Tuesday in unsealing an 11-count indictment resulting from a yearlong effort that began in November 2014. The indictment charges USPlabs; S.K. Laboratories Inc, Anaheim, California; and their operators with a variety of charges related to the sale of its products. (Read the indictment in full at the bottom of this page.)
Additionally, USPlabs, CEO Jacob Geissler, President Jonathan Doyle and Matthew Hebert, who was in charge of product packaging design, were charged with obstruction of an FDA proceeding and conspiracy to commit money laundering.
“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,” Principal Deputy Assistant Attorney General Benjamin C. Mizer said in a statement. “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 Justice Department's campaign focused enforcement resources in an "an area of the dietary supplement market that is causing increasing concern among health officials nationwide." During the campaign, 117 individuals and entities were pursued through criminal and civil enforcement actions. Of those, 89 were the subject of cases filed since November 2014.
Four of the defendants in the USPlabs case were arrested Tuesday, and two others will self-surrender, the Justice Department said. Geissler and Hebert pleaded not guilty to the indictment on Tuesday and were released under conditions, which included no contact with any of the non-USPlabs defendants.
Also charged in the indictment was USPlabs quality assurance executive in charge of compliance Kenneth Miles, S.K. Laboratories Vice President Sitesh Patel and USPlabs consultant Cyril Wilson.
FDA and IRS-CI special agents seized assets in dozens of investment accounts, real estate in Texas, and "a number" of luxury and sports cars.
The indictment, filed Nov. 4 in U.S. District Court in Dallas, alleges USPlabs engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling. It then lied about the source and nature of those ingredients after it put them in products.
USPlabs told some of its retailers and wholesalers that it used natural plant extracts in Jack3d and OxyElite Pro when it used a synthetic stimulant manufactured in a Chinese chemical factory, according to the indictment.
The defendants sold some products without determining if the products were safe to use and knew of studies that linked the products to liver toxicity, the indictment alleges.
USPlabs and its principals told the FDA it would stop distribution of OxyElite Pro in October 2013 after it was implicated in an outbreak of liver injuries, according to the indictment. However, the indictment says that USPlabs engaged in an "all hands-on-deck effort" to sell as much OxyElite Pro as it could as quickly as possible.
“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,” FDA Deputy Commissioner for Global Regulatory Operations and Policy Howard Sklamberg said in a statement.
The workout and weight-loss supplements were sold in large, national dietary supplement retail chains in addition to big box retailers and online vendors. The indictment redacted identification of at least one of the chains.
Health and wellness product retailer GNC Holdings Inc, Pittsburgh, Pennsylvania, issued a statement on Tuesday in response to the actions taken by federal authorities.
"As soon as GNC was made aware of this investigation, the company provided its full cooperation," GNC said in a statement. "GNC is committed to maintaining the trust and confidence of our customers, and we have rigorous policies and procedures in place with respect to third-party vendors and suppliers to ensure that they meet the highest standards of compliance and accountability. We regularly review those policies and augment them as necessary in an effort to ensure they are as robust and rigorous as possible."
GNC shares dropped by as much as 27 percent during Tuesday's session before it closed down 6.4 percent. GNC continued to slide Wednesday and was down more than 3.5 percent.