FDA case against Hi-Tech reveals startling charges

According to an MSNBC special report, the fight between the Food and Drug Administration (FDA) and Norcross, Ga.-based Hi-Tech Pharmaceuticals that heated up last spring over the ephedra ban has blown up to include accusations not only of using ephedra after the ban, but also: planning to assassinate an FDA agent and blackmail an assistant U.S. attorney; spiking “dietary supplements” with pharmaceuticals; importing illegal steroids; making fake Ecstasy tablets sold on U.S. streets; and making a muscle-building drink later marketed as a cleaning solution to avoid federal investigators. These allegations are a part of the current indictment facing Hi-Tech and 11 executives and an alleged illegal Internet pharmacy operated out of Belize.

The current case accuses the defendants—including Jared Wheat, the company’s president and chief executive officer (CEO)—of advertising and selling generic prescription drugs they claimed were from Canada, but which FDA alleges were really from a “substandard and unsanitary” operation in Belize. The drugs involved include the steroids oxymethelone and stanzolol; controlled drugs equal to Ambien, valium and Xanax; and the prescription drugs Viagra, Cialis, Lipitor and Vioxx. Further, Wheat is charged with violating an anti-organized crime statute, which carries a maximum of 20 years in prison. Prosecutors characterized Wheat as a “lifelong drug dealer,” noting he was convicted for selling Ecstasy at age 19. Wheat pleaded not guilty to the charges and asserted Hi-Tech is operating its business legally.

There is no word on how this indictment, or numerous other related cases against Hi-Tech parties, will affect the company’s dietary supplement operations, as federal officials have not issued any new warnings or notifications about Hi-Tech supplements.

The allegation of planned assassination and blackmail surfaced March 21, 2007, in response to efforts by Wheat to obtain bail and release from jail, where he’s been since Sept. 14, 2006. Prosecutors claimed Wheat conferred with Hi-Tech co-founder and convicted steroid dealer Thomas Holda, as well with company vice president Stephen Smith, about obtaining a firearm silencer for use in an attack on an FDA agent involved in the criminal investigation into the company’s spiking case. While the FDA agent was not harmed, prosecutors noted customs officials intercepted a silencer Holda bought online and had shipped to his home. Holda pleaded guilty to felony possession of a firearm silencer. He is still in jail in Atlanta, serving a 54-month sentence, but his attorney said evidence shows Holda purchased the silencer for a friend.

Further, the government alleged Wheat, Smith and others discussed hiring a private investigator to dig up dirt on Assistant U.S. Attorney Aaron Danzig for the purposes of blackmail. These allegations of violence and intimidation were not used for additional charges but to oppose bail for Wheat, whom they called a serious flight risk. The feds argued Wheat faces a long prison term and is believed to have stashed money in offshore accounts. They added Wheat fled a 2004 raid by Belize officials, transferring $1.7 million to a bank in Panama.

Last year’s battle was over Hi-Tech’s use of ephedra in dietary supplements after FDA had banned the botanical. HI-Tech tried to fight FDA’s ban in the courtroom in August 2005, requesting the agency be held to the decision by the U.S. District Court of Utah’s decision seemingly against FDA’s ban. Hi-Tech said its lawyers gave them the go-ahead to resume ephedra-related sales, and its products were clearly labeled as containing ephedrine alkaloids. After an appeals court reversal of the Utah decision, the company said ceased its ephedra sales. However, FDA was unconvinced and seized $3 million of Hi-Tech ephedrine and diet product supplies in April 2006.

An affidavit from special agent Edward Smith further alleged Wheat and company had marketed a bodybuilding nutritional supplement that actually contained Verve—a liquid concoction featuring the “date rape” drug gamma hydroxybutyrate (GHB) and gamma butyrolactone (GBL), a cleaning solvent. The company allegedly masked the harsh chemicals’ taste with blue Kool-Aid and sugar, and stored the product in 55-gallon drums in a storage facility in Duluth, Ga. Officials reported a cooperating defendant stated the product was later repackaged as a cleaning solution and included labeling against human consumption in order to conceal the products true intent.

The pile of allegations also includes Hi-Tech employee Brad Watkins, who is accused of selling fake Ecstasy tablets bearing a playboy bunny imprint. The tablets tested negative for MDMA, the active ingredient in Ecstasy, but tested positive for Clobenzorex, an illegal stimulant. Tests on similar pills in the company’s Belize operation produced similar results.

In addition to all these charges, the company currently faces a lawsuit for its partnership with fellow stimulant supplement manufacturer, Newton, N.J.-based NVE Pharmaceuticals, which has also been under fire from the feds over the past couple of years. The companies joined forces to make an “herbal” sex supplement branded as Sigra, but Dutch officials seized over half a million packets of the product and noted tests revealed sildenafil, the active ingredient in Viagra.

Attorneys for Wheat and Hi-Tech maintain the defendant is needed outside jail to help comb through the countless pages of evidence, and accused the government of using excessive tactics not normally used in such a case. One representative noted Holda’s wife committed suicide after dealing with the government’s “unduly aggressive” actions, including threatening to arrest her for driving vehicles associated with the case, as well as summoning Georgia Family and Children Services case workers to investigate her fitness as a parent of her infant daughter.

Brett Bloomton, Stephen Smith’s attorney, told MSNBC: “For the allegations they are facing, these guys should not be incarcerated. There are many worse criminals out there. I know. I represent some of them.”