USPLabs Owners Plead Guilty
Plea deal forces USPlabs out of business as owners plead guilty. Two remaining of the group of seven pleaded guilty to defrauding consumers with purposefully mislabeled products that netted them $230 million in ill gotten gains according to federal authorities. Days before trial the final two fold in their legal battle against the feds.
USP Labs' sales pitch got customers' attention: The Dallas company sold products developed by "the world's top pharmacists & scientists;" dietary supplements that were derived from natural ingredients like geraniums.
But they were in fact dangerous synthetic stimulants made in Chinese chemical factories, according to prosecutors. Nevertheless, the company's executives marketed their products as safe, even though in private they talked about the dangers. The CEO referred privately to one of their controversial ingredients — known as DMAA — as a "questionable powder," court records show.
The products flew off the shelves and netted the owners over $230 million, the feds say.
USP Labs and its owners were charged in 2015 in an 11-count indictment. On the eve of trial last week, the last of seven defendants pleaded guilty. Cyril Willson, 38, of Ralston, Neb., and Matthew Hebert, 40, of Dallas, admitted to introducing misbranded food into interstate commerce with the intent to defraud or mislead.
The $46 billion supplement industry in the U.S. is booming. About 75 percent of Americans use them. As a result, product safety remains a top concern of federal regulators and health officials, and USP Labs was one of the government's top targets. It was among more than 100 supplement makers and marketers that federal authorities sued and indicted in a 2015 nationwide sweep.
The recent plea agreements came after U.S. District Judge Sam A. Lindsay denied defense motions seeking to suppress some government evidence. It is unclear whether the pleas might also have had something to do with new evidence the government said in court documents it planned to introduce. Prosecutors said it showed that some of the defendants have a history of smuggling illegal substances and tried to intimidate witnesses.
Patrick R. Runkle, a trial attorney with the Justice Department's consumer protection branch, said in a February court filing that evidence of the defendants' prior bad acts was relevant because it showed their "knowledge, plan and absence of mistake" in the USP Labs case.
Most of the defense attorneys either could not be reached or declined to comment. But they said in legal filings that there is "no meaningful scientific evidence" that DMAA is unsafe, and they noted it wasn't a banned substance at the time.
They asked the judge in late February to bar the government's new evidence of prior acts, arguing that it was unfairly prejudicial, irrelevant and "almost certain to waste the court's time with mini-trials" about products and ingredients not in the indictment.
But before Lindsay could rule, the defendants pleaded guilty.
"We are extremely happy that USP Labs will no longer be in business. That was extremely important to us," Leanne Sparling, whose son died in 2011 after taking one of the company's supplements, said Friday. But she added, "No matter what, it does not bring back Michael."
Sparling, a California real estate agent, had testified during a civil case that an Army doctor told her that Jack3d, a USP Labs supplement, caused her son's death. She said her son was taking the supplement to get stronger while in the Army and believed it was completely natural. Michael Sparling, a 22-year-old private, collapsed after running and went into cardiac arrest at an Army medical center in El Paso, reports said.
Lies and fiction
USP Labs' top-selling products from 2009 to 2013 — Jack3d and OxyElite Pro — contained DMAA, which authorities said resulted in a rash of liver injuries. At least one other person died after taking the products. When the "outbreak of injuries" was reported in 2013, the company rushed to sell its remaining inventory before substituting DMAA with different ingredients, prosecutors said.
USP Labs claimed those new ingredients came from trees native to India and the pulverized roots of a Chinese herb, but the government says they were also unsafe and mislabeled. USP Labs' owners hid this from the public and from federal regulators by falsifying import documents, ingredient names, labeling and other information about their products, prosecutors said.