Springfield business owner Charles Thao pleaded guilty in federal court yesterday for his role in a multimillion-dollar fraud scheme involving dietary supplements.
Thao, owner of Nutrapha Research LLC, pleaded guilty before U.S. District Judge Richard E. Dorr to his role in conspiracies to violate the Food, Drug and Cosmetic Act, to defraud the U.S., and to commit wire and mail fraud and money laundering.
According to a news release from the U.S. Attorney for the Western District of Missouri, several Web sites were used to sell $17.4 million worth of dietary supplements that were marketed with illegal claims that they could prevent, treat or cure several diseases and conditions, including diabetes, irritable bowel syndrome and high blood pressure.
Under federal law, dietary supplements may not claim to treat, cure or prevent specific diseases or classes of diseases. None of the supplements sold by Thao are generally recognized by experts with appropriate training and experience as being safe or effective for the conditions recommended in their labeling, the release said. The drugs – including Diabeticine, Diaxamol, Glucolex and Hyperexol – also lacked approval from the Food and Drug Administration and proper labeling with directions for use, and as a result, they are categorized as unapproved and misbranded drugs, the release said.
Thao admitted that he and his wife, co-defendant Mai Lor, also of Springfield, contracted with co-defendant Tony T. Pham, of Grand Rapids, Mich., to market and distribute the supplements. They claimed that six products sold online had been proven reliable through clinical trials, but no clinical testing had actually been performed.
Lor pleaded guilty in February to her role in the conspiracy to commit wire fraud. She was a co-owner of Medycinex and at Thao's direction, she also formed Bio Nutrasource LLC to carry on the business, the release said. Pham pleaded guilty in July 2009 for his role in the conspiracy to violate the Food, Drug and Cosmetic Act and to one count of wire fraud.
Under the terms of the plea agreement, Thao agreed to dissolve his company, Nutrapha Research, and he also agreed not to reorganized the business under any name for similar business purposes. Nutrapha and Medycinex, an earlier company owned Thao, purchased dietary supplements and sold them online, the release said.
Thao also agreed to forfeit to the government $17.4 million, which represents the proceeds obtained through the offenses, three Springfield real estate properties, three vehicles and the funds credited to multiple bank accounts.
Thao is subject to a sentence of up to 20 years in federal prison without parole for conspiracy to commit money laundering and up to five years in prison without parole on each of the other three conspiracy counts to which he pleaded guilty, plus a fine of up to $250,000.
A sentencing hearing will be scheduled after a presentence investigation is completed by the U.S. Probation office, the release said.
The case is being prosecuted by Supervisory Assistant U.S. Attorney Michael S. Oliver, with investigation by the FDA's Office of Criminal Investigation.[[In-content Ad]]
