Puerto Rican National Sentenced for Distributing Counterfeit Pharmaceuticals

A Puerto Rican man was sentenced Monday, January 28, 2013, to two years in federal prison for being a key member of an organization that distributed large quantities of Chinese-made, counterfeit pharmaceuticals across the United States.

Francis Ortiz Gonzalez, 36, was sentenced the morning of Monday, January 28, 2013, by U.S. District Judge George H. Wu, who also ordered the defendant to pay $324,530 in restitution to the pharmaceutical companies that manufacture brand name products such as Lipitor, Viagra, Xanax and Cialis.

The case is the result of investigations by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI); the Food and Drug Administration, Office of Criminal Investigations; and the U.S. Postal Inspection Service.

In September 2009, federal agents executed a search warrant at Ortiz Gonzalez's residence in Trujillo Alto, a suburb of San Juan, Puerto Rico. Inside the home, investigators found more than 100,000 pills that resembled a variety of popular prescription medications made by companies such as Pfizer Inc. and Eli Lilly and Company. Investigators found evidence that Ortiz Gonzalez obtained the counterfeit pills from China and had shipped more than 140,000 of them to individuals throughout the United States. If the drugs had been authentic, the retail value of the pills Ortiz Gonzalez possessed in his home and shipped would be more than $1 million.

Following a six-day trial last summer, Ortiz Gonzalez was convicted on one count of conspiracy and seven counts of trafficking in counterfeit pharmaceuticals. Ortiz Gonzalez was acquitted on three charges. His wife, Ideliz Aleman-Valentin, was acquitted on all charges.

Ortiz Gonzalez packaged and shipped more than 140,000 counterfeit tablets during a seven-month period in 2009 while working as a "dropshipper" for a counterfeit drug ring allegedly headed by Bo Jiang, 34, a Chinese national whose last known residence was in New Zealand. In January 2011, Jiang was taken into custody on a provisional arrest warrant by New Zealand law enforcement authorities, but he fled shortly after being released on bond. Jiang remains a fugitive.
In a related case before Judge Wu, a North Hollywood man was found guilty on January 11 of federal charges involving the trafficking of counterfeit pharmaceuticals.

Edward Alarcon, 44, was convicted of two counts of trafficking in counterfeit OxyContin and Cialis; he was acquitted on two other counts. The evidence presented during a three-day jury trial showed that Alarcon had purchased the counterfeit OxyContin from Bo Jiang, the same man who allegedly supplied Ortiz Gonzalez.

On Nov. 10, 2009, HSI special agents found approximately 237 counterfeit OxyContin pills and approximately 1,592 counterfeit Cialis pills in Alarcon's car and house. Investigators also found hundreds of other counterfeit pills, including Viagra and Levitra. Only a month before the federal search, Alarcon had been convicted in state court on counterfeit drug charges for selling counterfeit Cialis to an undercover Los Angeles Police Department officer in 2008.

Alarcon is scheduled to be sentenced by Judge Wu April 4. At that time, Alarcon faces a statutory maximum sentence of 20 years in federal prison.

Government Agencies Caution the Dangers of Counterfeit Lenses

Officials are warning the public about the dangers associated with counterfeit decorative contact lenses. The Food and Drug Administration's Office of Criminal Investigations, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), and U.S. Customs and Border Protection (CBP) are working together to seize illegal and harmful versions of correctable vision lenses and decorative or color contact lenses that are illegally imported and distributed throughout the United States.

"This is another example of organized criminals trying to make a buck with no regard for the health and safety of the public," said ICE Director John Morton. "Consumers need to be smart and vigilant. Saving a few dollars is certainly not worth playing roulette with your eyesight."

Many people are unaware that it is illegal to purchase or sell contact lenses of any kind without a prescription from an ophthalmologist, optometrist or a specially licensed optician under the supervision of an eye doctor. In 2010, the worldwide contact lens market was estimated to be $11.7 billion while the U.S. market was believed to be $2.1 billion. Decorative and colored lenses are becoming an increasingly larger percentage of the market and elaborate Halloween costumes are one of the most popular reasons.

Decorative contact lenses can typically be ordered at the office that conducts the eye exam and contact lens fitting. The Fairness to Contact Lens Consumers Act gives the consumers the right to obtain a copy of their contact lens prescription, allowing them to fill that prescription at the business of their choice, including online discount sites. Various legitimate stores and websites sell decorative lenses but consumers should avoid buying these lenses from anywhere that does not require a valid prescription.

"A valid prescription helps ensure consumers get contact lenses that are determined to be safe and effective by FDA," said John Roth, director, FDA's Office of Criminal Investigations. "Without it, people can risk serious eye injuries for one night of fun."

Recently, the FDA/OCI, CBP and HSI have begun collaboration to counter the threat of counterfeit contact lenses throughout the country. Working with the ICE-led National Intellectual Property Rights Coordination Center (IPR Center), HSI and CBP have already made several large seizures and the cases are ongoing.

"There is nothing fun about counterfeit products especially when they are a threat to the health and safety of the American people," said U.S. Customs and Border Protection Deputy Commissioner David V. Aguilar. "CBP protects the nation from harmful products like counterfeit contact lenses by interdicting them before they can arrive at your local store, allowing Halloween festivities to be enjoyed safely."

The FBI and the U.S. Postal Inspection Service – both partners at the IPR Center – are also contributing to this operation to further identify the entities that are counterfeiting, misbranding and adulterating these products, their exposure to trademark infringement and misrepresentation, and the means by which they are illegally importing, distributing and selling these defective health products.

The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting, piracy and commercial fraud. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft and commercial fraud. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.

Puerto Rican Man Faces Ten Year Sentence for Distribution of Counterfeit Pharmaceuticals

A Puerto Rican man faces up to 10 years in prison after being found guilty by a jury the week ending in August 10, 2012, on federal charges stemming from his role as a key operative for a drug ring that distributed large quantities of Chinese-made counterfeit pharmaceuticals throughout the United States and worldwide.

Francis Ortiz Gonzalez, 36, was convicted following a six-day trial on one count of conspiracy and seven counts of trafficking in counterfeit pharmaceuticals. His sentencing is set for Nov. 8 before U.S. District Judge George Wu. Ortiz-Gonzalez. His wife, Ideliz Aleman-Valentin, and two other defendants were named in a 30-count indictment handed down by a grand jury in Los Angeles in June 2009. The jury that convicted Ortiz acquitted Aleman-Valentin.

In 2009, special agents with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) executed a federal search warrant at Ortiz-Gonzalez's residence in Trujillo Alto, Puerto Rico, a suburb of San Juan. Inside the home, investigators found more than 100,000 pills made to resemble a variety of popular prescription medications, including Viagra, Cialis, Valium, Xanax and Lipitor.

The ensuing investigation revealed that Ortiz-Gonzalez had packaged and shipped more than 160,000 counterfeit tablets during a six-month period in 2009 while working for the organization. Many of those shipments were mailed to Southern California, which is why the case was brought to Los Angeles.

The burgeoning popularity of e-commerce has led to an explosion in the number of websites offering prescription drugs online," said Claude Arnold, special agent in charge for HSI Los Angeles. "But consumers who are considering purchasing pharmaceutical products over the Internet should heed that old expression 'buyer beware.' Part of what you're paying for when you buy established brands, regardless of the product, is quality control. Imposter drugs like these pose a serious threat to users who mistakenly assume these substances are safe."

The indictment allege that Ortiz-Gonzalez acted as U.S.-based distributor for a criminal enterprise, allegedly headed by Bo Jiang, 34, a Chinese national whose last known residence is New Zealand. In January 2011, Jiang was taken into custody on a provisional arrest warrant by authorities in New Zealand, but fled shortly after being released on bond. He remains a fugitive.

According to the indictment, Jiang advertised the counterfeit medications over the Internet. As part of the scheme, he allegedly recruited individuals from around the world to act as distributors for the products. The U.S.-based distributors, including Ortiz-Gonzalez, were responsible for receiving the parcels of counterfeit pharmaceuticals from China, then repacking and shipping them to fill individual customer's orders throughout the United States.

The probe, which commenced in 2008, involved HIS Los Angeles, the Food and Drug Administration, Office of Criminal Investigations and the U.S. Postal Inspection Service.

The Department of Homeland Security and the Department of Justice are working together to combat intellectual property crimes. In fiscal year 2011, HSI and U.S. Customs and Border Protection made nearly 25,000 seizures involving counterfeited and pirated products, a 24 percent increase compared to fiscal year 2010.

As the largest investigative arm of the Department of Homeland Security, HSI plays a leading role in targeting criminal organizations responsible for producing, smuggling and distributing counterfeit products. HSI focuses not only on keeping counterfeit products off our streets, but also on dismantling the criminal organizations behind such illicit activity.

Extensive ICE Operation Arrests 90, Millions of Synthetic Narcotics Seized

More than 90 individuals were arrested and approximately five million packets of finished designer synthetic drugs were seized in the first-ever nationwide law enforcement action against the synthetic designer drug industry responsible for the production and sale of synthetic drugs that are often marketed as bath salts, Spice, incense, or plant food. More than $36 million in cash was also seized.

As of July 26, 2012, more than 4.8 million packets of synthetic cannabinoids (K2, Spice) and the products to produce nearly 13.6 million more, as well as 167,000 packets of synthetic cathinones (bath salts), and the products to produce an additional 392,000 were seized.

Operation Log Jam was conducted jointly by the U.S. Drug Enforcement Administration and U.S. Immigration and Customs Enforcement (ICE), with assistance from the IRS Criminal Investigation, U.S. Postal Inspection Service, U.S. Customs and Border Protection, FBI, Food and Drug Administration's Office of Criminal Investigations, as well as state and local law enforcement members in more than 109 U.S. cities and targeted every level of the synthetic designer drug industry, including retailers, wholesalers and manufacturers.

"Today, we struck a huge blow to the synthetic drug industry. The criminal organizations behind the importation, distribution and selling of these synthetic drugs have scant regard for human life in their reckless pursuit of illicit profits," said Acting Director of ICE's Office of Homeland Security Investigations James Chaparro. "ICE is committed to working with our law enforcement partners to bring this industry to its knees."

"Although tremendous progress has been made in legislating and scheduling these dangerous substances, this enforcement action has disrupted the entire illegal industry, from manufacturers to retailers," said DEA Administrator Michele M. Leonhart. "Together with our federal, state and local law enforcement partners, we are committed to targeting these new and emerging drugs with every scientific, legislative and investigative tool at our disposal."


"The synthetic drug industry is an emerging area where we can leverage our financial investigative expertise to trace the path of illicit drug proceeds by identifying the financial linkages among the various co-conspirators," said Richard Weber, chief, IRS Criminal Investigation. "We will continue working with our law enforcement partners to disrupt and ultimately dismantle the highest level drug trafficking and drug money laundering organizations that pose the greatest threat to Americans and American interests."

"The U.S. Postal Inspection Service aggressively investigates the use of the U.S. Mail system for the distribution of illegal controlled substances and its proceeds. Our agency uses a multi-tiered approach to these crimes: protection against the use of the mail for illegal purposes and enforcement of laws against drug trafficking and money laundering. This includes collaboration with other agencies," said Chief Postal Inspector Guy J. Cottrell.

"The mission of U.S. Customs and Border Protection is to guard our country's borders from people and goods that could harm our way of life," said Acting Commissioner David V. Aguilar. "We are proud to be part of an operation that disrupts the flow of synthetic drugs into the country and out of the hands of the American people."

Over the past several years, there has been a growing use of, and interest in, synthetic cathinones (stimulants/hallucinogens) sold under the guise of "bath salts" or "plant food." Marketed under names such as "Ivory Wave," "Purple Wave," "Vanilla Sky," or "Bliss," these products are comprised of a class of dangerous substances perceived to mimic cocaine, LSD, MDMA and/or methamphetamine. Users have reported impaired perception, reduced motor control, disorientation, extreme paranoia, and violent episodes. The long-term physical and psychological effects of use are unknown but potentially severe.

These products have become increasingly popular, particularly among teens and young adults and those who mistakenly believe they can bypass the drug testing protocols that have been set up by employers and government agencies to protect public safety. They are sold at a variety of retail outlets, in head shops and over the Internet. However, they have not been approved by the Food and Drug Administration for human consumption or for medical use, and there is no oversight of the manufacturing process.

Smokable herbal blends marketed as being "legal" and providing a marijuana-like high have also become increasingly popular, particularly among teens and young adults, because they are easily available and, in many cases, they are more potent and dangerous than marijuana.

These products consist of plant material that has been coated with dangerous psychoactive compounds that mimic THC, the active ingredient in marijuana. Just as with the synthetic cathinones, synthetic cannabinoids are sold at a variety of retail outlets, in head shops and over the Internet. Brands such as "Spice," "K2," "Blaze," and "Red X Dawn" are labeled as incense to mask their intended purpose.

While many of the designer drugs being marketed today that were seized as part of Operation Log Jam are not specifically prohibited in the Controlled Substances Act (CSA), the Controlled Substance Analogue Enforcement Act of 1986 (AEA) allows these drugs to be treated as controlled substances if they are proven to be chemically and/or pharmacologically similar to a Schedule I or Schedule II controlled substance. A number of cases that are part of Operation Log Jam will be prosecuted federally under this analogue provision, which specifically exists to combat these new and emerging designer drugs.

DEA has used its emergency scheduling authority to combat both synthetic cathinones (the so-called bath salts like Ivory Wave, etc.) and synthetic cannabinoids (the so-called incense products like K2, Spice, etc.), temporarily placing several of these dangerous chemicals into Schedule I of the CSA. Congress has also acted, permanently placing 26 substances into Schedule I of the CSA.

In 2010, poison centers nationwide responded to about 3,200 calls related to synthetic "Spice" and "bath salts." In 2011, that number jumped to more than 13,000 calls. Sixty percent of the cases involved patients 25 and younger.

New York Man Sentenced for Prescription Drug Trade

An upstate New York man was sentenced Wednesday, May 16, to three years probation and ordered to pay restitution in the amount of $13,377 for importing counterfeit Viagra and Cialis tablets into the United States. This investigation was conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the U.S. Food and Drug Administration (FDA).

According to court documents, between January and June 2011, Curtis Henry, 53, of Rochester, ordered more than 700 counterfeit Viagra and Cialis tablets from a source in China. After receiving the counterfeit pharmaceutical tablets, Henry sold them in Rochester. Henry was sentenced by U.S. District Judge Charles J. Siragusa after he pleaded guilty to the charge Nov. 2, 2011.

"Counterfeit drugs pose a serious threat to public health and safety, and those who engage in this illicit practice have no concern for the well-being of people's lives," said James Spero, special agent in charge of HSI Buffalo, N.Y. "People who purchase drugs should never have to put their lives at risk because the product is fake, unsafe or untested. Homeland Security Investigations and our law enforcement partners in New York will continue to work diligently to make sure counterfeit products stay off of our streets."

"This investigation again demonstrates the commitment of FDA's Office of Criminal Investigations to aggressively pursue those who distribute counterfeit prescription drugs and who greedily place at risk the health and safety of consumers to line their pockets," said Mark Dragonetti, special agent in charge of the FDA, Office of Criminal Investigations, New York Field Office. "I would like to commend the U.S. attorney's office and our joint law enforcement partners at Homeland Security Investigations in our continued efforts in combating counterfeit drugs."

As the largest investigative arm of the U.S. Department of Homeland Security, HSI plays a leading role in targeting criminal organizations responsible for producing, smuggling and distributing counterfeit products. HSI focuses not only on keeping counterfeit products off the streets, but also on dismantling the criminal organizations behind such illicit activity.

HSI manages the National Intellectual Property Rights Coordination Center (IPR Center) in Washington, D.C. The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its 20 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP (Intellectual Property) theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.

Two Sentenced for Illegal Prescription Drug Trade

Two Israeli citizens pleaded guilty Monday, April 23, and were sentenced for smuggling counterfeit and misbranded pharmaceuticals into the United States, including the erectile dysfunction drug marketed in the United States as Cialis®. The sentences resulted from an investigation conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Office of Criminal Investigation for the U.S. Food and Drug Administration, with essential assistance from the Israeli National Police.

Benny Carmi, 59, and Moshe Dahan, 39, appeared April 23 before Federal District Court Judge Carol E. Jackson in the Eastern District of Missouri.

Carmi admitted that he introduced misbranded prescription drugs into interstate commerce, smuggled prescription drugs into the United States, and sold counterfeit prescription drugs. Carmi was sentenced to 10 months in prison and must pay a criminal fine of $30,000 and forfeit $50,000 to the United States.

Dahan also admitted to smuggling prescription drugs into the United States. He was sentenced to one year of probation and is required to pay a $15,000 fine. Dahan paid a forfeiture of $15,000 to the United States.

"Counterfeit pharmaceuticals pose a very serious threat to our public health and safety," said Gary Hartwig, special agent in charge of HSI Chicago. "People shouldn't have to put their health in jeopardy because they bought a prescription drug online that is fake, substandard, tainted or untested. HSI will continue to work with our law enforcement partners to keep imposter drugs off the street and aggressively pursue those who place consumers at risk for their own financial gain."

According to court documents and testimony from the hearings on Monday, April, 23, both men operated an Internet business in Israel that used multiple websites, including "allpillsrx.com," "newpharm.net," "pharmacy-on-line.com," "pharmacy-on-line.com," and "pharmacy-pal.com," to illegally sell large amounts of prescription drugs to U.S. purchasers. About 9,029 separate drug shipments to were sent to purchasers in the United States, generating about $1,475,363 in gross proceeds.

Carmi and Dahan were prosecuted after the government conducted a series of undercover purchases on some of the defendants' Internet websites and ordered prescription drugs and controlled substances, including the drug marketed in the United States as Meridia®, without providing a valid prescription from a qualified health care professional. In response, the defendants shipped a number of drug packages to shipping addresses located in the Eastern District of Missouri containing prescription drugs.

Typically, packages containing drugs were imported to St. Louis, Mo. from China and India, with the exterior packaging falsely describing the contents of the shipments as "gifts" that had "no commercial value."

Laboratory test results of samples of the drugs obtained through defendants' Internet websites revealed that these drugs were not genuine versions of the drugs that had been manufactured in FDA-approved drug manufacturing plants in accordance with federal law.

Moreover, some of defendants' drugs were sub-potent, containing less than the amount of active drug ingredient than what was specified in the labeling for the drugs.

The defendants are also forfeiting the Internet domain names of their illegal drug websites.

"The FDA-Office of Criminal Investigations will continue to work with our international and domestic law enforcement partners to bring to justice those who seek to sell counterfeit, adulterated and misbranded pharmaceuticals to U.S. citizens via the Internet." said Patrick J. Holland, Special Agent in Charge of the Kansas City Field Office, U.S. Food and Drug Administration, Office of Criminal Investigations."

This case is part of HSI's Operation Guardian, a multi-agency effort to combat the increasing important of substandard, tainted and counterfeit products that pose a health and safety risk to consumers.