USPLabs Indicted on Major DOJ Charges, Including Money Laundering

Today, the Department of Justice issued statements that USPLabs has been charged with 11 counts related to past transgressions from 2008 through 2013.

The indictment has been made public and can be downloaded below:

Seven executives have been charged.

Update 12/30/2015 A case study has been published detailing each liver toxicity report. Click here to skip to it.

The charges filed against USPLabs

This post has been updated to briefly summarize the charges/allegations.

Remember, these are allegations until proven in a court of law.

The DOJ alleges that,

USPLabs

These indictments, if true, are serious and should be taken seriously

  • USPLabs and SK Laboratories (their manufacturer) allegedly “conspired to commit fraud” by having their Chinese supplier create a fake COA (Certificate of Authenticity) for their synthetically-created DMAA, making it out to be a natural extract instead.

  • They then allegedly further “conspired to commit fraud” by promoting those synthetically-created supplements as natural extracts (ie “geranium [stem]” remained on the label).

    These allegations constitute as the “mail fraud” and “wire fraud”, since the products were sold interstate and online.

  • They also allegedly committed other counts of import fraud by requesting various synthetic ingredients, but requesting that the supplier put fake labels on them, such as “green coffee”

  • Similarly, they allegedly marketed products as Aegle Marmelos but the DOJ claims they were just synthetic aegeline.

  • USPLabs allegedly attempted to find cynanthum auriculatum extract, but could not. The DOJ states that they instead used pulverized roots, but didn’t label them as such. This was with the OxyELITE Pro Advanced formula, which [thankfully] was extremely short-lived.

  • Further regarding the above point: DOJ alleges that USPLabs executives were aware of potential hepatotoxicity from cynanthum auriculatum, but believed that they were using little enough to not cause issues.

  • Liver issues did indeed occur. When this news surfaced, the DOJ does not seem to be happy with the way USPLabs reacted to the FDA, stating that they tried to sell as much as possible before it could be seized (further potentially putting more humans at risk for liver problems).

  • The DOJ then claims that USPLabs “laundered money”, due to them moving money in and out of various personal accounts and shell enterprises. The indictments also list real estate properties owned.

All in all, USPLabs pulled down a revenue of over $400 million between October 2008 and October 2013.

Charges were also filed against their manufacturing lab, S.K. Laboratories.

USPLabs Responds

USPLabs posted the following response early November 19, 2015:[1]

On November 17, 2015, the government announced charges against USPlabs and its owners relating to dietary supplements sold in the past. None of the allegations relates to any of the Company’s current formulations of any of its products. The Company stands firmly behind the safety and integrity of its products. The announced charges have done nothing to change that.

Regarding the government’s allegations, the Company and its owners vehemently deny that the Company ever attempted to defraud its retail customers or consumers, sold any unsafe products, or engaged in any wrongdoing. They expect to be fully vindicated and look forward to their day in court.

–USPLabs, November 19, 2015

Moving forward, we’ve already seen that it’ll be business as usual for USPLabs’ marketing and production teams, as they just sent out beta shipments of their new pre workout supplement (Modern PRE).

USPLabs’ Legal Team funds case study regarding liver failures

USPLabs Liver Toxicity Case Study

Click the image to see the PDF

On December 30, 2015, a case study funded by law firm Covington & Burling LLP in Washington DC was published in The Annals of Hepatology. It is titled The mystery of the Hawaii liver disease cluster in summer 2013: A pragmatic and clinical approach to solve the problem.[2]

They look at each case of liver failure, and explain how each case of liver failure possibly occurred. One thing that commonly comes up is Acetaminophen (Tylenol), so it could be possible that there were some bad interactions with the over-the-counter pain killer.

We always found it suspicious that the liver problems only occurred in Hawaii, which led us to believe that there was something more localized happening.

That article will be produced in the January / February 2016 edition of the journal.

Serious Ramifications to Follow

It is hard to put into words the enormity of this situation. This is likely to send massive shockwaves throughout the industry, to the extent that we haven’t seen before.

These charges are the first serious actions taken by the government entities on a large brand.

A major concern is that USPLabs allegedly took synthetic ingredients, and had their Chinese manufacturer falsify CoAs (certificate of authenticity) by stating that the ingredients were indeed natural. We’ve discussed other ingredients where this same type of situation may occur.

If this hits the airwaves as hard as we believe it will, you can bet there will be major changes at several manufacturers and brands. Consumer confidence will be at an all-time low, and GNC’s stock is already dropping.

A Nationwide Sweep of Over 100 Companies to Come Completed

Meanwhile, the Department of Justice and its partners are in completed the process of pursuing over 100 makers and marketers of supplements. They state that “117 individuals and entities were pursued through criminal and civil enforcement actions. Of these, 89 were the subject of cases filed since November 2014.”

Amongst the other companies recently cited by the DOJ in November 2015:

  • Vibrant Life / Clifford Woods
  • Viruxo / James R. Hill
  • Optimum Health / Lesa Sverid / Lehan Enterprises
  • Bethel Nutritional Consulting / Felix Ramirez / Kariny Ramirez
  • Regeneca / VivaCeuticals / Matthew Nicosia

Federal Trade Commission attacking egregious claims

The FTC is also involved, going after several companies with false or unsubstantiated claims.

As always, charges are simply accusations and allegations until proven guilty in the court of law.

The days of “no enforcement” are likely behind us. The only question is, What’s next?

This story is developing.

UPDATE: It’s “Business as Usual” for the Marketing / Production teams!

Just a day after the indictment, USPLabs has gone back to work, shipping out beta tests of their new pre workout! It’s “business as usual” until further notice!

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References

  1. USPLabs; “USPlabs Statement about Government Allegations”; http://usplabsdirect.com/statement-about-government-allegations; November 19, 2015
  2. Teschke, Rolf, et al; “The mystery of the Hawaii liver disease cluster in summer 2013: A pragmatic and clinical approach to solve the problem”; Annals of Hepatology; Vol. 15 No. 1: 91-118; January-February 2016; Retrieved from http://www.annalsofhepatology.com/revista/numeros/2016/HP161-12-Mystery%20(web)%20(FF_041215V)_PROTEGIDO%20(1).pdf (backed up at https://blog.priceplow.com/wp-content/uploads/usplabs-the-mystery-of-the-hawaii-liver-disease-cluster-in-summer-2013-20151230.pdf)
Posted in , by Mike | Tagged , , , .
  • Ken

    Oh snap, I think I’ll just stick with protein powder, creatine, beta analine, citrulline and caffeine. You just can’t trust these companies to do right thing anymore. Cash is still king, who cares about the health and welfare of our thousands of customers. Says the supplement companies.