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Intellectual Property Rights
03/25/2010

2 arrested for illegally trafficking counterfeit weight-loss medication

International undercover investigation by ICE, FDA and USPIS disrupts counterfeit drug manufacturing operation

DENVER - A 30-year-old Chinese national from Kunming, Yunnan, China, was arrested in Hawaii on Tuesday following charges made in a criminal complaint for illegally importing counterfeit weight-loss medication. The arrest was made without incident by special agents from the following federal agencies: U.S. Immigration and Customs Enforcement (ICE), Food and Drug Administration's Office of Criminal Investigations (FDA OCI), and U.S. Postal Inspection Service (USPIS).

Sengyang Zhou, aka "Tom," traveled from China to Hawaii intending to meet with persons interested in distributing his counterfeit weight-loss pills in the United States. Following his arrest, Zhou appeared before a federal magistrate judge in Honolulu, Hawaii, for initial proceedings on the Criminal Complaint pending against him. He waived his rights to further proceedings in the District of Hawaii and will be transported in U.S. Marshal custody to the District of Colorado, where further proceedings will be conducted in the case. The government has moved that Zhou be detained without bond pending the completion of the prosecution of this case.

A second defendant, Qingming Hu, 60, was also arrested without incident in Plano, Texas, on Tuesday for participating in and aiding this illegal scheme. Following her arrest, Hu appeared before a federal magistrate judge in the Eastern District of Texas. She waived her right to a preliminary hearing in the Eastern District of Texas and agreed to make an appearance in Denver, Colo., on April 7 to face the charges pending against her. She was released on bond.

According to the affidavit in support of the criminal complaint, during the course of 2008, 2009, and 2010, the FDA issued a series of alerts on its website concerning tainted weight-loss pills and counterfeit drugs. Initial alerts focused on "Superslim," "2 Day Diet," and Meitzitang, among other purported weight-loss products believed to have been imported from China and being marketed as dietary supplements or nutritional products. The FDA stated in these initial alerts that the items posed a very serious health risk to consumers, because, based on analysis, they were found to be drugs that contained undeclared active pharmaceutical ingredients, including Sibutramine (a controlled substance), antidepressants, potent diuretics available only by prescription, and drugs not approved in the United States.

The ingredient Sibutramine, can cause high blood pressure, seizures, tachycardia, palpitations, heart attack or stroke. In later alerts, FDA warned the public about counterfeit versions of the brand-name drug "Alli," a popular over the counter weight-loss drug manufactured by Glaxo-Smith Klein. The alerts indicated that these counterfeit drugs were also being imported into the United States from China and did not contain the proper active pharmaceutical ingredient for the authentic product; instead, they contained dangerous levels of Sibutramine. The counterfeit versions of Alli were being sold in the United States, among other ways, through Internet auction websites.

During the course of the investigation, law enforcement agents identified Zhou as the alleged trafficker and importer into the United States of these counterfeit and unapproved purported weight-loss-related drugs. According to the complaint affidavits, Zhou also identified himself as the manufacturer of the counterfeit Alli. Zhou allegedly engaged in these activities primarily through the operation of an Internet website and Internet postings placed on one or more business-to-business websites that solicited orders from customers in the United States and elsewhere. The defendant also communicated with customers and potential customers via Yahoo! email accounts.

Undercover agents placed numerous orders for the counterfeit and illegal diet pills. In turn, money was wired to one of three bank accounts in the United States, or to Zhou's girlfriend in China. At one point, two agents flew to a third country in an undercover capacity to meet with Zhou. At that meeting they discussed in depth Zhou's manufacturing capabilities. Zhou identified himself as the manufacturer of the counterfeit Alli and promised to fix defects in the counterfeit versions of the Alli he had previously shipped, defects that had been noted by the FDA in its public alerts.

The affidavit in support of the criminal complaint filed against Zhou identifies at least one victim of Zhou's crime. A man who had been taking an authentic version of Alli found a cheaper version of the product being sold over the Internet. The victim ordered the pills, which were allegedly counterfeit produced by Zhou. As a result, the victim took the pills and started to feel ill, exhibiting a significant adverse reaction, including symptoms associated with heart palpitations, numbness in his left arm, severe anxiety, enormous eye pressure/headaches, profuse sweating and chills. He thought he was having a heart attack-like episode, and his life was in jeopardy. The victim gave investigative agents the bottle he purchased over the Internet, which was tested at FDA's Forensic Chemistry Center. The pills contained Sibutramine and were determined to be fake versions of Alli. Agents were able to tie the pill purchase to Zhou.

Zhou's website, "www.2daydietshopping.com" indicated that his business operated a U.S. branch out of Plano, Texas. Agents determined through investigation that the branch was operated by Qing Ming Hu, a naturalized U.S. citizen born in China. Some of the product shipped to Hu for redistribution to U.S. customers included "2 Day Diet" and "Super Slim," items that were listed among the illegal, unapproved drugs by the FDA in its public alerts.

As part of the coordinated arrests of Zhou and Hu, federal agents executed a search warrant on the Plano, Texas residence that served as Zhou's United States branch. Agents also served seizure warrants to freeze funds in four bank accounts in the United States that Zhou had established to collect funds from his illegal drug sales.

"An important mission of ICE is to enhance public safety by ensuring that counterfeit pharmaceuticals don't enter the stream of commerce and then into the hands of customers," said John Morton, Department of Homeland Security Assistant Secretary for U.S. Immigration and Customs Enforcement (ICE). "With the outstanding teamwork among our law enforcement partners, our ICE agents have used our unique customs expertise and law enforcement authorities to quickly put an end to dangerous diet pills being sold to unsuspecting consumers."

"The Food and Drug Administration will work together with other government entities to aggressively target those individuals who put the public's health at risk by selling counterfeit drugs," said Commissioner of Food and Drugs Margaret A. Hamburg, M.D. "International borders and the perceived anonymity of the Internet will not deter FDA from investigating violations of the law. I commend the U.S. Attorney's Office in Colorado and all agencies involved in this case for their tireless effort to protect the public health."

"This arrest is evidence that no matter where you are, be it in the United States or abroad, if you use the U.S. Mail to endanger the American public, we will find you," said Shawn Tiller, Inspector-in-Charge of the Denver Division of the U.S. Postal Inspection Service. "We will continue to use our resources to protect the American public and ensure the integrity of the U.S. Mail. This case is another great example of federal law enforcement agencies partnering together to keep America safe."

Zhou is charged with the following crimes:

  • introduction and delivery for introduction into interstate commerce of unapproved new drugs, which carries a penalty of not more than three years imprisonment and up to a $250,000 fine;
  • importing pharmaceutical drugs contrary to law, which carries a penalty of not more than 20 years in federal prison, and up to a $250,000 fine;
  • importing and distributing Schedule IV, non-narcotic controlled substances, which carries a penalty of not more than five years imprisonment and up to a $250,000 fine;
  • and trafficking in counterfeit goods, which carries a penalty of not more than 10 years in federal prison and up to a $250,000 fine.

Hu is also charged with introduction and delivery into interstate commerce of unapproved new drugs, as well as with distribution of a Schedule IV non-narcotic controlled substance, an offense which carries a penalty of not more than three years imprisonment and up to a $250,000 fine.

This case is being jointly investigated by the following federal agencies: U.S. Immigration and Customs Enforcement (ICE), Food and Drug Administration's Office of Criminal Investigations (FDA OCI), and the U.S. Postal Inspection Service (USPIS).

Assistant U.S. Attorney Ken Harmon, District of Colorado is prosecuting this case. The U.S. Attorney is David Gaouette.

The criminal complaint is a probable cause charging document. Anyone accused of committing a federal felony crime has a Constitutional right to be indicted by a federal grand jury.

The charges contained in the criminal complaint are allegations, and the defendants are presumed innocent unless and until proven guilty.