Springfield Business Owner Pleads Guilty

• Date: March 23, 2010
• Source: Admin

Conspiracy to fraudulently market dietary supplements over the Internet with illegal claims landed the Springfield, Mo. Business owner pleading guilty in federal court.

Conspiracy of Springfield

Springfield, Mo., was involved in fraudulently market dietary supplements over the Internet with illegal claims that these supplements could prevent, treat or cure a number of diseases. Around $17 million worth of products has been sold during 2005 and 2006 through several web sites.

Who Pleaded Guilty

Charles Thao of Springfield pleaded guilty before U.S. District Judge Richard E. Dorr accepting his role in conspiracies to violate the Food, Drug and Cosmetic Act, to defraud the United States, to commit wire fraud, to commit mail fraud and to commit money laundering.

Thao admitted that he along with his wife, co-defendant Mai Lor, who was also associated with Springfield, contracted with co-defendant Tony T. Pham, 41, of Grand Rapids, Mich., to market and distribute the dietary supplements.

Although no clinical testing had been done to check the reliability of the product, but it had been  claimed that six products sold over the Internet had been proven reliable through clinical testing for the treatment and prevention of diabetes, irritable bowel syndrome, gout, high cholesterol, high blood pressure, heartburn and diarrhea.

Impact

According to the terms of plea agreement, Thao is supposed to dissolve his business, Nutrapha Research, LLC, and will not initiate the company under any name for similar business purposes.

Thao is also supposed to forfeit to the government $17,421,059, the amount for which he and his co-defendants are jointly and severally liable, which represents the amount of proceeds obtained as a result of the offenses, three real estate properties in Springfield, three vehicles and the funds credited to various bank accounts.

Under federal statutes, Thao is subject to a sentence of up to 20 years in federal prison without parole for conspiracy to commit money laundering, and up to five years in federal prison without parole on each of the other three conspiracy counts to which he pleaded guilty today, plus a fine up to $250,000 or twice the gross gain on each of the four counts. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office

Similar Food Fraudulent Cases

2008 Chinese Milk Scandal –The 2008 Chinese milk scandal was a food safety incident in the People's Republic of China involving milk and infant formula, and other food materials and components, tainted with melamine.

This incident caused China lose an estimated 300,000 victims, six infants dying from kidney stones and other kidney damage, and a further 860 babies hospitalized. The chemical appeared to have been added to milk in order to cause it to appear to have a higher protein content.

Basmati rice Fraudulence - In 2002 the UK's Food Standards Agency (FSA) carried out the first DNA survey of basmati rice sold in the UK. It found that only 54 per cent of the bags labelled as such contained pure basmati rice - defined as a particular species of grain grown in the plains around the Ganges in northern India and east Pakistan. All the other samples had been diluted with inferior varieties - some by more than 60 per cent. One FSA official calculated that the fraud swindled consumers out of over £5 million that year alone

SK Foods – in 2010 February, Frederick Scott Salyer, owner of SK Foods, company which used to grow, process and distribute tomatoes, was charged of racketeering, wire fraud, mail fraud, money laundering and obstruction of justice. Salyer is alleged to have manipulated the industry through price fixing, bribery and mislabeling. Specifically, he is alleged to have bribed purchasing managers at food companies to guarantee that the companies purchased SK Foods' products over its competitors and for its competitors' pricing information.

Source:

http://www.federalcriminaldefenseblog.com/2010/....-fraud-and-mislabeling/

http://www.newscientist.com/....rise-of-food-fraud.html

http://www.justice.gov/usao/mow/news2010/thao.ple.htm

http://news.bbc.co.uk/2/hi/8478195.stm