Drug firm accused of deception

ATLANTA - A Norcross pharmaceutical company accused of selling adulterated and unapproved new drugs over the Internet has been indicted by a federal grand jury.

Eleven individuals, including the founder of Hi-Tech Pharmaceuticals, Jared Wheat, were indicted in the scheme, and four of them appeared at a bond hearing Wednesday.

Federal officials say the drugs were marketed in spam advertisements as generic version of drugs from Canada, but the pills were actually from a home operation in South America.

"The indictment's allegations are disturbing because customers thought they were getting legitimate and safe prescription drugs over the Internet from Canada at cheaper prices, when in reality they received adulterated fakes that were crudely made in an unsanitary house in Belize," U.S. Attorney David Nahmias said.

An automated message on Hi-Tech's telephone system said the company was experiencing technical difficulties with the phone.

Charged in the indictment are: Jared Robert Wheat, 34, of Alpharetta; David Dalton Johnson, 37, of Pinehurst, N.C.; David Alan Brady, 40, of Pinehurst, N.C.; Stephen Douglas Smith, 38, of Duluth; Thomas Holda, 43, of Duluth; Sergio Ronaldo Oliveira, 46, of Hoschton; Brad Neal Watkins, 38, of Birmingham, Ala.; David Watkins, 40, of Norcross; Steven Blinder, 42, of Aberdeen, S.D.; Michelle Young, 38, a citizen of Belize; and Guillermo Pech, 28, a citizen of Belize.

The defendants are charged with conspiring to import controlled substances into the United States and conspiring to violate the wire and mail fraud statute and to introduce into interstate commerce adulterated and misbranded prescription drugs.

They are also charged - with the exception of David Watkins, Brad Watkins and Blinder - with different substantive violations including mail fraud, distribution of controlled substances and introducing adulterated and misbranded new drugs. Wheat is charged with engaging in a continuing criminal enterprise.

The indictment seeks to forfeit properties, automobiles and back accounts and seeks a money judgment of no less than $19.8 million.

According to information presented in court, Wheat and others opened a drug manufacturing facility in Belize in 2002. Authorities say the defendants made 24 different drugs, including steroids such as Oxymethelone and stanazolo and unapproved versions of Ambien, Valium, Xanax, Viagra, Cialis, Lipitor and Vioxx.

Drug Enforcement Agency agent Sherri Strange said the federal government has made prescription drug abuse a priority, but buying and selling the drugs has become easier because of the popularity of the Internet and the anonymity it provides.

"One of the fastest growing drug abuse concerns is prescription drugs." Strange said. "... As our children sit down at the family computer to do their schoolwork, research projects and converse with friends, criminal organizations like the one alleged today slither into their lives. Every one of us has received spam e-mails directing us to visit Web sites to order supposed generic prescription drugs and controlled substances. Buyers beware."

While pointing to the Internet as a tool for deceiving consumers, government officials Wednesday pointed to one Web site at www.justthinktwice.com to help parents and children learn more about the dangers of drugs.

According to information on the Web, the U.S. Food and Drug Administration and the U.S. Attorney's Office seized dietary supplements at Hi-Tech Pharmaceuticals in February. The products contained 25 mg of ephedrine alkaloids per tablet, which are adrenaline-like stimulants with the potential for dangerous effects on the heart.

Officials seized raw materials and products worth $3 million.

In November 2004, the Federal Trade Commission charged Hi-Tech with deceiving consumers through advertising.

Patrick Crosby, a spokesman with the U.S. Attorney's Office, said he could not comment on past cases.