Supplement Shiller Pleads Guilty to Fraud

SPRINGFIELD, Mo.—From 2005 to 2006, Tony T. Pham generated almost $12 million in sales of “dietary supplements” over the Internet, marketing products from his Grand Rapids, Mich.-based firm with claims that they had been proven to treat and prevent serious issues including diabetes, hypertension and gout. In reality, Techmedica Health’s products were unapproved new drugs, marketed using false testimonials and fabricated medical experts via Web sites deliberately rigged to appear compliant to FDA but displaying different information to outside visitors.

On July 2, 2009, Pham pleaded guilty in federal court to charges of fraudulent marketing, wire fraud and distribution of unapproved new drugs and misbranded drugs. He agreed to forfeit the $11.9 million derived from product sales—for which he and his co-defendants are jointly liable, may be sentenced to up to 25 years in federal prison without parole, and could be fined up to $500,000 or twice the gross gain.