California man admits role in pet medication scheme
Seven guilty pleas so far in scam brought to attention of local officials
The lucrative international scam targeted the most ordinary of household necessities — flea and tick medication for pets.
The latest break in the wide-ranging counterfeit investigation came this week when a California vendor admitted to a federal judge he had been peddling unregistered and smuggled animal pesticides online for 15 years, landing $2.5 million in profits.
The medical con, with links to Houston and Galveston, included conspirators in Europe, Africa, the Caribbean and the U.S. who dumped fake merchandise onto unsuspecting proprietors at mainstream pet shops in every state, according to federal authorities and court documents.
Seven men have now owned up to their involvement and entered guilty pleas in federal courts in Houston and Los Angeles, but one alleged major supplier remains an international fugitive believed to be in the Cayman Islands.
The anomaly in this take-down was that fake products labeled with well-known brand names, such as Frontline and Advantix, entered the legitimate pet pharmaceutical marketplace without detection, said Richard Halverson, assistant special agent in charge at Homeland Security Investigations in Houston.
Halverson ran the investigation jointly with
officials from the Houston office of the Food and Drug Administration’s criminal investigation branch.
“The products that these guys were selling ended up all over the U.S.,” he said. “We were seeing it penetrate the legitimate supply chain, on the web, but also big brand name stores had received some of this product.”
During a five-year investigation, Homeland Security officers seized $35 million in products of unknown origin with fake labels or products made for use in other countries that were not cleared for U.S. sales, Halverson said. He estimated there were also millions of dollars’ worth of products that investigators did not recover.
Philip Hilder, attorney for Lam Ngoc Tran, a California man who was one of several fake packaging manufacturers convicted in the case, said the conspiracy was fueled by greed.
Motivated by money
“Other than money, I don’t know what the motivation would be,” said Hilder, whose client is serving a four-year federal prison sentence. “He repackaged a product that he knew was not manufactured in the states but was under the belief it was the same product manufactured abroad. He knew that he had violated the law and accepted his responsibility by not contesting the charge.”
Court documents allege the masterminds behind the fraudulent flea medication scheme were Iain Nigel Mackellar and Craig Mostert, who were authorized to buy the drugs for foreign markets, but they illegally diverted them to the United States.
Mackellar, a U.K. native, is charged in Houston federal court with being a top illegal supplier of foreignmanufactured flea and tick medication and pet pesticides to U.S. distributors in a scheme that stretches back to 2008. Among the allegations, Mackellar is charged with smuggling a shipment in May 2015 that was declared during a customs inspection as a donation for hurricane relief.
Mostert, a veterinarian from South Africa, pleaded guilty in a Los Angeles federal courtroom to shipping foreign medication by means of false statements and was ordered to pay $145,000 in forfeiture. Mostert and Mackellar sold most of the illegal goods to two California men, Sean L. Gerson and Chris Martin.
Gerson, who netted $2.5 million from the fake products, told a judge in Los Angeles on Monday that he knowingly transported and sold prescription Comfortis and Ciprofloxacin meant for South African consumers to an undercover officer in Missouri in August 2016, after it was smuggled into the United States.
Other vendors pleaded guilty in federal courts in Houston and Los Angeles to selling or mass producing the counterfeit packaging. Some of their illegal pet medicine was seen online by agents, who brought the counterfeiting crew to the attention of the Galveston County District Attorney’s Office and federal prosecutors in Houston.
Pet medications, including pills and pesticides applied externally to combat fleas and ticks, are exposed to different regulatory rigor in different countries, and they are measured and mixed differently, said Thom Mrozek, a spokesman for U.S. Attorney’s office for the Central District of California in Los Angeles, where many of the cases were brought. There is also a significant price differential when you compare the U.S., European and South African markets, he said.
Assistant United States Attorney Joseph O. Johns, who prosecuted the cases in Los Angeles, said Gerson’s plea Monday caps off a lengthy effort to protect consumers from the scam.
“Our goal with these prosecutions has been to dismantle the entire smuggling and distribution network for these illegal products,” he said.