Los Angeles Times

2 convicted in counterfei­t 5-Hour Energy drink case

An El Cajon couple will be sentenced in April on a federal conspiracy charge.

- By Geoffrey Mohan geoffrey.mohan @latimes.com

federal jury has convicted a San Diego couple on conspiracy charges in connection with an elaborate scheme to sell millions of bottles of counterfei­t 5-Hour Energy shots in the U.S., prosecutor­s announced.

Joseph and Adriana Shayota of El Cajon contracted with the distributo­rs of the energy drink to sell the product in Mexico, then altered its Spanish-language packaging and labeling and distribute­d it in the U.S. at prices well below the company’s normal retail price, prosecutor­s alleged.

That relabeling effort involved 350,000 bottles sold from late 2009 through 2011. The scheme transforme­d the following year into one that produced and marketed several million bottles of an entirely fake drink that was mixed under unsanitary conditions by day laborers, said U.S. Atty. Brian J. Stretch, who prosecuted the case, which resulted in the conviction­s Monday.

The Michigan distributo­r, Living Essentials, removed several million bottles of the counterfei­t drink from retail outlets several years ago.

It is not known whether any consumers were harmed by drinking the fake mix. The Food and Drug Administra­tion, which regulates 5-Hour Energy as a dietary supplement, has investigat­ed at least eight deaths and a dozen life-threatenin­g reactions involving energy drinks before and during the time period of the counterfei­ting.

“U.S. consumers rely on the FDA to ensure that their foods — and drinks — are safe and wholesome. When criminals introduce counterfei­t foods into the U.S. marketplac­e, they not only cheat consumers, but place consumers’ health at risk,” said Lisa L. Malinowski, special agent in charge of the FDA’s Office of Criminal Investigat­ions in Los Angeles.

Six other defendants have pleaded guilty to similar charges in connection with the scheme, and Living Essentials won a $20-million civil judgment against all eight defendants and dozens of others this year.

“We are gratified by the court’s decision,” Melissa Skabich, a spokeswoma­n for Living Essentials, said Wednesday. “Criminal behavior should be punished, and in this case, justice was served.”

Joseph Shayota, 64, and his wife, Adriana, 45, operated Baja Exporting, which contracted with the drink distributo­r in 2009 to sell pre-packaged display cartons filled with the energy shots in Mexico. They purchased the drinks at a 40% discount, according to court records.

Problems with interpreti­ng the expiration dates on the bottles led to poor sales, and the couple began selling the products with fake English-language labels in the U.S., according to court documents.

After selling off the lot of 350,000 shots at 15% below normal retail prices, the couple ratcheted up the conA spiracy, joining with other defendants in Michigan and Southern California to manufactur­e a fake beverage bottled and labeled to mimic the authentic product, according to court records.

From December 2011 through October 2012, the Shayotas ordered more than 7 million counterfei­t sleeve labels and hundreds of thousands of display boxes, federal prosecutor­s alleged.

A Midwest distributo­r eventually sold 4 million bottles of the counterfei­t product to the Shayotas’ company and another company, prosecutor­s alleged. Defendants involved in that aspect of the operations were among those who have pleaded guilty.

A sentencing hearing for the Shayotas is scheduled for April. They could face as much as 15 years in prison, a $2.2-million fine, and be ordered to pay restitutio­n to Living Essentials and two other partnershi­ps that share manufactur­ing, licensing and distributi­on rights. The six defendants who have pleaded guilty will be sentenced early next year.

Attorneys for the Shayotas were not immediatel­y available for comment Wednesday.

 ?? Spencer Platt Getty Images ?? A PLAN to export 5-hour Energy drink to Mexico morphed into a counterfei­ting and fraud scheme.
Spencer Platt Getty Images A PLAN to export 5-hour Energy drink to Mexico morphed into a counterfei­ting and fraud scheme.

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