More defendants in USPlabs case expected to plead guilty

The top executives of USPlabs LLC, a dietary supplement distributor in Texas, and its former contract manufacturer, California-based S.K. Laboratories Inc., have entered agreements to plead guilty to crimes after being indicted several years ago by a grand jury.

USPlabs co-founders Jacobo (aka Jacob) Geissler and Jonathan Doyle each entered agreements to plead guilty to one count of conspiracy to introduce misbranded food into interstate commerce with intent to defraud and mislead, according to court records.

Based on an 11-count grand jury indictment, prosecutors alleged USPlabs committed fraud in a scheme that enabled the sports supplement distributor to reap hundreds of millions of dollars. Health officials linked the company to a 2013 outbreak of hepatitis in Hawaii and the continental United States.

Geissler was CEO of USPlabs during the time of the alleged criminal activity. He is scheduled to appear for his re-arraignment on Feb. 28, at which time he could plead guilty in the U.S. District Court for the Northern District of Texas.

As part of his plea agreement, Geissler agreed not to “engage in any business activities related to the dietary supplement industry” for 10 years beginning the day he is sentenced, and he must “cease all business of USPlabs LLC within … 90 days of the entry of his guilty plea.”

It’s unclear what role Geissler has today at USPlabs, whose website and social media accounts remain active.

Doyle’s re-arraignment was last week, at which time he entered a guilty plea before a U.S. Magistrate Judge in Dallas, who recommended the plea be accepted. As INSIDER previously reported, he was the first defendant in the case who signaled his intent to plead guilty.

The government recommended Doyle serve no more than 48 months (four years) in prison, but the court could impose a sentence of up to five years in prison for the criminal count, according to his plea agreement. Other possible penalties include a fine of up to $250,000, supervised release following a term of imprisonment, forfeiture of property and mandatory restitution.

Doyle and Geissler both agreed not to contest any forfeiture to the United States of property seized by the government and related to the investigation of the criminal case.

S.K. Laboratories, which manufactured supplements for USPlabs, has entered an agreement to plead guilty to one count of introduction of misbranded food into interstate commerce.

Provided the court accepts S.K. Laboratories’ plea agreement, it’s bound by the parties’ agreement regarding the appropriate sentence in the case: two years of probation. The parties also agreed S.K. Laboratories would be subject to a “compliance plan” and, if the court considers it necessary, the placement of a monitor at the company’s expense, S.K. Laboratories’ plea agreement revealed.

S.K. Laboratories and its vice president, Sitesh Patel, were scheduled to appear Feb. 25 in court for a re-arraignment.

Patel served time in prison after being convicted of conspiracy and mail fraud in an unrelated criminal case involving prohormones in dietary supplements.

According to his plea agreement in the USPlabs case, Patel has agreed to plead guilty to two counts: conspiracy to introduce misbranded food into interstate commerce with intent to defraud and mislead; and introduction of misbranded food into interstate commerce.

The government recommended Patel be sentenced to no more than 72 months in prison. But his plea agreement indicated that is the maximum prison sentence he faces on the two criminal counts: five years for the conspiracy count and one year for the other criminal charge to which he agreed to plead guilty.

Lawyers for Doyle, Geissler, Patel and S.K. Laboratories did not immediately respond to requests for comment. FDA and the U.S. Department of Justice also had no immediate comment on the plea agreements.

Four other defendants in the case—including USPlabs itself—have not entered plea agreements.

A jury trial is scheduled to begin March 6 before U.S. District Judge Sam Lindsay in Dallas. The trial could be a complex one with a battle of the experts over nuanced issues, such as whether an ingredient in USPlabs’ products required a safety-related notification to FDA, what factors could have contributed to an outbreak of liver injuries, and whether USPlabs reasonably relied on the advice of outside counsel in making certain business decisions.