Friday, October 23, 2020

Ex-CEO of dietary supplement maker USPLabs sentenced to prison in fraud case


They wanted to lose weight and get stronger to boost their military careers. But after taking USPLabs’ dietary supplements – with ingredients made in Chinese labs – they became severely sickened and ended up in hospital emergency rooms, according to court testimony.

One woman said she needed a liver transplant. Another had her gallbladder removed. Other soldiers died after taking the supplements.

On Tuesday evening, Jacobo Geissler, former chief executive of the now-defunct Dallas company, was sentenced to five years in prison. It was the maximum punishment for his role in importing a dangerous synthetic drug and falsely labeling it as a natural extract in his products.

Geissler, 44, pleaded guilty in February 2019 — on the eve of trial — to one count of conspiring to introduce misbranded food into interstate commerce with an intent to defraud or mislead. He and USPLabs were among eight defendants in the case that began with a 2015 indictment.

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But he was most responsible for the illegal scheme, U.S. District Judge Sam Lindsay said during Tuesday’s sentencing hearing, which lasted all day.

USPLabs case was one of the nation’s biggest supplement fraud cases. The booming $46 billion supplement industry came under government scrutiny in 2015 during a major crackdown over safety concerns, and USPLabs was one of the top targets. Federal regulators that year took action against over 100 other supplement makers and marketers.

Unlike pharmaceuticals, most dietary supplements do not need FDA approval before they hit the market. A Pew report from earlier this year said that supplements were the cause of more than 15,000 reports of health problems sent to the FDA between 2004 and 2013, including almost 4,000 hospitalizations.

Lindsay said Geissler put profit over the safety of the public.

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The judge also cited government evidence showing that Geissler was committing fraud with his dietary supplement company while he was still on probation for an earlier conviction related to peddling illegal steroids sourced from China.

“There’s a similarity between the two [cases],” said Lindsay, who also fined Geissler $250,000.

Patrick R. Runkle, a trial attorney with the Justice Department’s consumer protection branch, said that when a co-defendant wrote Geissler to say his product had likely contributed to a soldier’s death, Geissler’s main concern was keeping such statements out of email.

He said Geissler’s strategy was simple: put products into the marketplace and hope bad things didn’t happen; and if they did, try to make enough money to be able to deal with any potential consequences.

The Dallas company claimed it sold dietary supplements derived from natural ingredients like geraniums. But they actually contained DMAA, a dangerous synthetic stimulant made from chemicals in Chinese factories, according to prosecutors. Geissler directed his Chinese supplier to use fraudulent paperwork to ship the powders his company bought, the judge said.

The company’s executives marketed their products as safe even though in private they talked about the dangers, court records show. The products flew off the shelves and netted the owners over $230 million, the feds say.

Lindsay allowed Geissler to begin serving his sentence in January. A total of seven defendants have pleaded guilty in the case. The government dismissed charges against an eighth defendant who agreed to enter a diversion program.

USPLabs’ top-selling supplements with DMAA — OxyElite Pro and Jack3d — factored heavily in Tuesday’s sentencing hearing. Supplement retailer GNC marketed such products to servicemen and women on U.S. military bases, according to testimony.

Danielle Black, a 31-year-old Army flight medic who served two deployments in Afghanistan, testified that she took OxyElite Pro in 2013 to try to lose weight. She quickly became sick, with nausea, vomiting, fatigue, abdominal pain and severe jaundice.

“I looked like a Simpsons character,” she said.

Her urine turned a dark “Coca-Cola” color. Doctors had to remove her gallbladder, she said. They later told her the supplement was to blame for her illness, said Black, who added that she still has lingering health issues.

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Cynthia Novida told Lindsay that after taking OxyElite Pro in 2013 to lose weight, she had to have a liver transplant. Associated health problems, she said, ruined her naval career by forcing her to retire early. Novida, 52, said she left the Navy in 2016 as a chief petty officer after serving for 24 years.

The symptoms she described after taking the USPLabs supplement were similar to Black’s. She said she slept all day, couldn’t hold down food and her eyes turned a “bright yellow” color.

“My career was done,” she said, in tears.

Novida said she still feels tired at times and that her doctors also linked her symptoms to the supplement.

Both women said they settled their legal claims with USPLabs.

When the supplements were first linked to an outbreak of liver injuries in 2013, the company rushed to sell its remaining inventory before substituting DMAA with different ingredients, prosecutors said.

Dana Pittard, a retired Army general and a former Fort Bliss commander, testified Tuesday that DMAA in USPLabs’ products was found to have contributed to the deaths of three of his soldiers at the El Paso base in 2011 and 2012.

“After the first two, we were very, very concerned,” Pittard said.

He said he learned DMAA was banned in Canada and Australia, and he asked GNC to remove the USPlabs products from the shelves at his base. The Defense Department ended up getting the workout supplement banned from all of its military installations, he said. By 2013, the FDA was investigating the products, he said.

The FDA says DMAA, known as 1,3-dimethylamylamine, is an amphetamine derivative that was marketed for sports performance and weight loss in dietary supplements. Taking DMAA can raise blood pressure and lead to heart attacks, the FDA says. It’s now illegal to market products with DMAA as dietary supplements.

Michael Sparling had taken Jack3d to build muscle, Pittard said. The 22-year-old Army private collapsed in 2011 while exercising with his unit at Fort Bliss. He died the same day of a heart attack.

Leanne Sparling, his mother, testified Tuesday about getting the terrifying news by phone after her son had collapsed. She said Geissler “brought it upon himself” with his “greed and selfishness.” She said he obviously hasn’t learned his lesson because he’s a repeat offender.

Geissler, who is now barred from the supplement industry, told Lindsay he acknowledged his victims’ pain and grief.

“The last thing I wanted to do was harm anyone,” he said. “I’m not the same person who committed these reckless offenses.”

Michael Gibson, his defense lawyer, told the judge that his client’s company has so far paid out $22 million in settlements to victims who brought legal claims over its products.

Runkle told the judge that Geissler’s net worth is $13 million.

Geissler still faces a ruling, which Lindsay said he will issue later, on how much restitution he will owe.

Jonathan Doyle, another defendant in the case, testified for the government that Geissler was not around while he and other USPLabs executives worked hard to shutter the company under the terms of a plea agreement. Instead, Geissler was pitching a new supplement that he claimed would alleviate hangovers, he said.

Doyle, who was president of USPLabs, also said Tuesday that both he and Geissler lied under oath during a 2010 deposition in a lawsuit over their products. The questions they were asked related to whether the DMAA in their products was naturally sourced or synthetically produced, he said.

Doyle has also pleaded guilty and is scheduled to be sentenced later this week.

Source –


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