Companies, drop shipper plead guilty to conspiracy to smuggle, sell misbranded prescription pharmaceuticals

ALEXANDRIA, Va. – Two companies and a Baltimore man pleaded guilty Thursday to a multi-year conspiracy to smuggle and sell misbranded prescription pharmaceuticals, as well as the unlicensed wholesaling of prescription drugs in the U.S. This case was investigated by the Food and Drug Administration’s (FDA) Office of Criminal Investigations, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (ICE) and the U.S. Postal Inspection Service.

SB Medical Inc. and TC Medical Group – companies based in Toronto, Canada, and St. Michael, Barbados – and Hanoch David Stein, 37, of Baltimore, were indicted by a federal grand jury Dec. 2.

During the conspiracy, SB Medical Inc. and TC Medical Group received more than $33 million in proceeds from the illegal smuggling and sale of misbranded prescription pharmaceuticals in the U.S.

“The smuggling and distribution of misbranded drugs and medical devices of uncertain foreign origin has the potential for serious harm to patients,” said Dana Boente, U.S. attorney for the Eastern District of Virginia. “They could be improperly stored and transported, ineffective, adulterated, or unsafe. With our law enforcement partners, we will aggressively investigate and prosecute those who illegally distribute such products.”

“Individuals who circumvent the FDA-regulated supply chain by distributing unapproved prescription drugs and medical devices put the health and safety of the American public at risk,” said George M. Karavetsos, director of the FDA Office of Criminal Investigations. “The FDA has zero tolerance for those who participate in these illegal trafficking networks and, as we did in this case, we will continue to protect consumers by bringing such criminals to justice.”

According to the statements of facts and plea agreements filed with the court, SB Medical Inc. smuggled orthopedic injections, rheumatology infusions, cosmetic devices, ophthalmology products, and oncology drugs into the U.S. from at least 2011 through 2014. The non-FDA approved prescription pharmaceuticals were sourced from foreign countries, including: India, Turkey, France, Italy, and included Lucentis, Mabthera, Botox, Dysport, Euflexxa, Remicade, Restylane, Synvisc, Prolia, Orencia, Orthovisc and other products.

Members of the conspiracy working for SB Medical Inc. and TC Medical Group used false names to sell the pharmaceutical products to doctors and clinics in the U.S. To smuggle pharmaceuticals across the U.S. border, large shipments were broken down into multiple small shipments. Those shipments were sent to addresses in Maryland, New Jersey, Florida and other locations under different false names over several days. Customs forms falsely stated the contents and value of the shipments. Drop shippers in the U.S., including Stein, received these packages, removed indicia that they were from abroad, and reshipped them to doctors and clinics in the U.S. so the packages would have a U.S.-based return address.

“This case serves as a perfect example of what can be accomplished when different law enforcement agencies partner together to protect the American public from the many perils of illegal prescription drugs,” said Acting Postal Inspector in Charge David M. McGinnis, U.S. Postal Inspection Service-Washington Division. “It is our duty as Postal Inspectors to investigate and stop those who attempt to ship illicit drugs through the U.S. mail.”

Instead of storing pharmaceuticals at cool temperatures, members of the conspiracy used unregistered commercial mailboxes, residential backyards and porches, basement rooms, garages, kitchen fridges and freezers, which did not have adequate lighting, ventilation, temperature, humidity and security, as required for the safe storage and handling of the prescription drugs and devices.

To further deceive customers about the actual location of SB Medical Inc. and the foreign origin of the pharmaceuticals, members of the conspiracy asked customers to send checks to locations in the U.S.; drop shippers bundled the checks and forwarded them to Canada where they were cashed.

This investigation has resulted in the guilty pleas of other conspirators of SB Medical Inc. and TC Medical Group, including:

• David Eli Burke, 34, of Thornhill, Ontario, Canada, director of sales
• Shlomo David Rabi, 25, of Toronto, Ontario, Canada, director of sales and marketing
• Asaf Akiva Ibrahimian, 24, of West Orange, New Jersey, sales representative
• Reuven Daniel Mirlis, 23, of Passaic, New Jersey, sales representative
• Rivka Rabi, 26, of Lakewood, New Jersey, drop shipper