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Intellectual Property Rights and Commercial Fraud


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Chinese national pleads guilty to trafficking counterfeit pharmaceutical weight-loss drug

DENVER - A Chinese national pleaded guilty earlier this week to charges of trafficking and attempting to traffic in counterfeit goods, namely counterfeit versions of the pharmaceutical weight-loss drug known as "Alli." The change of plea hearing was held before U.S. District Judge Philip B. Brimmer.

Shengyang Zhou, aka "Tom," 31, of Kunming, Yunnan, China, who appeared at the hearing in custody, is scheduled to be sentenced by Judge Brimmer on May 6. A co-defendant who aided Zhou in illegally distributing other purported weight-loss products, Qingming Hu, 61 of Plano, Texas, pleaded guilty Jan. 28 to distributing Sibutramine, a Schedule IV non-narcotic controlled substance. Hu is scheduled to be sentenced by Judge Brimmer on April 28.

Zhou was first charged by Criminal Complaint on March 5, 2010. Hu was first charged by Criminal Complaint on March 18. Both defendants were arrested based on the Criminal Complaints on March 23. Zhou was arrested in Honolulu, Hawaii. Hu was arrested in Plano, Texas. Zhou and Hu were indicted by a federal grand jury in Denver on April 22. The government sought a superseding indictment on Nov. 17. Zhou then pleaded guilty on Jan. 24, 2011. Hu pleaded guilty on Jan. 27.

According to court documents, over the course of December 2008 through March of 2009, 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 having 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 non-narcotic controlled substance).

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 GlaxoSmithKlein. The alerts indicated that these counterfeit drugs were also being imported into the United States from China; they did not contain the proper active pharmaceutical ingredient for the authentic product, but instead contained dangerous levels of Sibutramine. The counterfeit versions of Alli were being sold in the United States, among other ways, through internet websites, including online auction websites such as eBay.

During the course of the investigation, law enforcement agents identified Zhou as the trafficker and importer into the United States of these counterfeit and unapproved purported weight-loss-related drugs. Zhou also identified himself as the manufacturer of the counterfeit Alli.

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 unapproved product featured in FDA public alerts was shipped to Hu for re-distribution to U.S. customers.

Agents acting in an undercover capacity placed numerous orders for the counterfeit and illegal diet pills. In turn, money was wired to bank accounts. 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. He also 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. During that meeting the undercover agents told Zhou that they had access to a private customs broker who would be willing to import the counterfeit Alli into the United States through air cargo shipments that would be mis-described.

As the investigation continued, undercover agents and Zhou agreed to meet in Hawaii to discuss increasing the order for counterfeit Alli. At that meeting Zhou provided proof that he was capable of producing large quantities of Alli, and that he had cured certain imperfections. At the end of the meeting agents handed Zhou cash to complete the Alli order transaction. At that point, Zhou was arrested.

A number of consumers reported feeling an assortment of adverse physical effects from taking the counterfeit Alli that they had purchased from the defendant's web page or through a re-distributor. One consumer, an emergency room doctor, suffered a mild stroke after ingesting the counterfeit Alli.

Zhou faces a maximum penalty of 10 years imprisonment, a $250,000 fine, and restitution for the counterfeit goods offense to which he has pleaded guilty.

Hu faces maximum penalty of five years imprisonment and a $250,000 fine for the distribution offense to which she has pleaded guilty.

"Since these pharmaceutical counterfeiters frequently operate from overseas, it's especially critical that our federal law enforcement agencies work together to identify, investigate and prosecute these criminals," said ICE Director John Morton. "This case demonstrates how our agents pooled their experience, expertise, and law enforcement authorities to shut down this criminal enterprise, and help protect the public."

"In this era of worldwide internet communication, threats to the health and safety of the American people frequently arise in far-flung corners of the world," said U.S. Attorney John Walsh. "As the success in this case shows, combating these global health threats requires the close coordination of U.S. government regulatory and law enforcement agencies. Thanks to the close team work of the Food and Drug Administration's Office of the Inspector General, U.S. Immigration and Customs Enforcement and the U.S. Postal Inspection Service, the U.S. Attorney's Office for the District of Colorado successfully brought this prosecution to stop the distribution of dangerous counterfeit diet drugs from China into the United States."

"Americans must have confidence that drugs introduced into and distributed throughout the United States are genuine, FDA-compliant products," said Patrick J. Holland, special agent in charge of the FDA Office of Criminal Investigations. "The FDA will aggressively pursue all foreign and domestic perpetrators of illegal drug distribution schemes who threaten the public's health by selling counterfeit drugs. We commend the U.S. Attorney's Office in Colorado and our law enforcement partners for the resolve and commitment they demonstrated in investigating and prosecuting this case."

"United States Postal Inspectors work diligently to prevent illegal drugs from being shipped through the mail," said Thomas Noyes, Postal Inspector in Charge of the Denver Division of the U.S. Postal Inspection Service. "Furthermore, it is a top priority to prevent criminals from using the mail for fraudulent means. This investigation shows the lengths cooperating agencies will go to stop and apprehend those involved in drug crimes. By preventing drugs in the mail our agents protect Postal employees and customers and dismantle criminal enterprises using the Postal system for criminal gain."

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

Zhou and Hu are being prosecuted by Assistant U.S. Attorney Kenneth M. Harmon, with assistance from Assistant U.S. Attorney Ryan Bergsieker, District of Colorado.


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Last Reviewed/Updated: 09/23/2014