Chinese Suppliers Plead Guilty to Mail Fraud Involving DMAA

Two Chinese citizens arrested in Las Vegas during SupplySide West 2017 have pleaded guilty to mail fraud charges related to a case involving the alleged sale of mislabeled synthetic stimulants to a government informant.  

Zhang Xiao Dong (aka Mark Zhang) and Gao Mei Fang (aka Amy Gao) were the sales and supply chain managers, respectively, for Genabolix USA and Shanghai Yongyi Biotechnology Co. Ltd. They and their companies, along with Genabolix’s principal Hu Chang Chun (aka James Hu), were indicted in October 2017 by a Dallas grand jury for the alleged illegal sale and importation of the synthetic stimulant DMAA (1,3-dimethylamylamine) and the similar DMHA (2-amino-6-methylheptane).

Hu was not arrested and is believed to be outside the United States, according to a Department of Justice (DOJ) press release on Gao's agreement.

Gao and Zhang separately agreed to plead guilty to count one of the indictment, which alleged mail fraud, while Gao also pleaded guilty to count three, a smuggling charge.

In her plea agreement, Gao admitted helping to sell synthetic stimulants, including 1,4-DMAA, to what she thought was a dietary supplement manufacturer in the United States. The indictment noted the purported supplement manufacturer buyer was a government informant. The Genabolix team agreed to mislabel the synthetic stimulant shipments as botanical ingredients to fool retailers the informant said would not stock supplements containing the stimulants.

In its press release, the DOJ said Gao admitted to knowing major American dietary supplement retailers would reject any dietary supplements known to contain stimulants such as DMAA and related derivatives. She also admitted to making false statements to FDA’s import division regarding the synthetic stimulant shipments entering the United States.

Each of the counts in the plea agreements carry a maximum 20 years in prison and a maximum USD$250,000 fine. Sentencing for Gao is scheduled for Oct. 1, 2018. The date for Zhang’s sentence was not disclosed. Gao had her re-arraignment hearing April 3, but there is no information on such a hearing for Zhang.

“U.S. consumers trust that their dietary supplements are safe and contain appropriate labeling. When unscrupulous producers add undeclared or misidentified ingredients to dietary supplements, there is no assurance that the product is safe for consumption,” said Catherine A. Hermsen, acting director, FDA Office of Criminal Investigations (OCI), in the DOJ press release.  “The FDA will continue to pursue and bring to justice those who participate in fraudulently marketing dietary supplements to the detriment of public health.”

Connection to Hi-Tech Pharmaceuticals

Genabolix was a supplier to Hi-Tech Pharmaceuticals, which has had its own share of federal legal troubles recently. Hi-Tech’s court battle against FDA over the legality of DMAA is now in a federal appeals court after a federal judge in Georgia ruled in favor of FDA; it’s founder Jared Wheat faces an 18-count criminal indictment for alleged manufacturing and distributing of controlled substances as well as fraud, money laundering and conspiracy.

Wheat has vigorously denied the allegations against him.

Shortly after the Genabolix arrests, Wheat told INSIDER his attorney Art Leach was helping Gao and Zhang with their cases. However, the new plea agreements show Gao has retained two new attorneys, Dallas-based Robert M. Burns and Las Vegas-based Lawrence C. Hill, while Zhang is now being represented by Dallas-based Frank Jackson.

The remaining case against Genabolix, Shanghai Yongyi Biotechnology and Hu Chang Chun is scheduled for trial on July 23, 2018 in the U.S. District Court for Northern Texas.