Dietary Supplement Ingredient Importers Arrested in Connection With Large-Scale Smuggling and Money Laundering Scheme
Two southern California residents were arrested on Nov. 28, 2018, in connection with a long-running scheme to smuggle purported dietary supplement ingredients into the United States from China, the Department of Justice announced.
Lynn Chau, 43, of Rosemead, California, and Bao Luu, 42, of Mira Loma, California, were charged in a seven-count indictment that was returned by a Los Angeles federal grand jury on November 7, 2018, and unsealed today. The indictment also charged Pure Assay Ingredients Inc., Chau’s import company located in City of Industry, California, and two Chinese citizens, Alex Wang and Ivy He, who worked for Pure Assay in Chengdu, China.
According to the indictment, the defendants conspired to deceive the Food and Drug Administration (FDA) and U.S. Customs and Border Protection (CPB) inspectors by mislabeling certain stimulants and other questionable ingredients as non-controversial substances to evade government scrutiny during import. The indictment alleges that the defendants sold the smuggled substances to dietary supplement manufacturers in the United States for use in consumer products. In one instance, the indictment contends that Chau and Luu assembled a false shipment to fool FDA into believing that Pure Assay destroyed substances the agency blocked from distribution. In reality, Pure Assay already had shipped out the real products and presented mislabeled substitutes for destruction.
“The public deserves honesty and integrity from companies importing ingredients for the products people purchase and consume,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “We will continue to pursue and prosecute those who import dangerous and illegal ingredients for fraudulent purposes.”
“This case alleges a scheme designed to generate profits at the expense of the public’s health and safety,” said United States Attorney Nick Hanna. “Members of the conspiracy are charged with smuggling prohibited substances, such as steroid precursors, and attempting to prevent U.S. officials from learning the true nature of the shipments that made their way into so-called dietary supplements. We will continue to investigate and prosecute people involved in deceptive practices that endanger consumers.”
According to the indictment, Pure Assay, Chau, Wang, and He prepared fraudulent documents, including false certificates of analysis and false labels, and submitted them to FDA when they believed that an ingredient would be denied entry or invite inquiries from FDA and CPB. The false documents typically declared the substances to be sucralose, melatonin, or other legal ingredients. The indictment alleges that the defendants used this method to smuggle into the United States designer steroids and stimulants for use in dietary supplements while disregarding the risk that their operation posed to consumers.
“American consumers are put at risk when the true nature of ingredients for dietary supplements is hidden from regulatory authorities,” said Charles L. Grinstead, Special Agent in Charge, FDA Office of Criminal Investigations’ Kansas City Field Office. “We will continue to pursue and bring to justice those who jeopardize the public health.”
The indictment against Pure Assay and its principals follows a separate, recent prosecution against several Chinese citizens charged with conspiring to mislabel synthetic dietary supplement ingredients or otherwise helping to hide the true nature of a purported new dietary supplement from American retailers. Three Chinese nationals arrested in Las Vegas last fall while attending a dietary supplement trade show later pleaded guilty in connection with that prosecution.
The case was investigated by FDA’s Office of Criminal Investigations. The case is being prosecuted by Trial Attorneys Patrick Runkle, Raquel Toledo, and David Sullivan of the Department of Justice’s Consumer Protection Branch, and Erik Silber, Assistant United States Attorney for the Central District of California.
An indictment merely alleges that crimes have been committed. All defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at www.justice.gov/usao-cdca.