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How 2 dietary supplement companies made $400 million off bogus weight loss products

Science & Society Picture Library

The Department of Justice is cracking down on the manufacturers of weight loss and workout supplements that sickened dozens of Americans.

The criminal indictment, which was unsealed this week, alleges an elaborate conspiracy by Dallas-based USPlabs, along with its California-based manufacturer SK Laboratories, to sell "natural" supplements that were actually laced with synthetic chemicals from China.

According to the DOJ, executives knowingly lied about what was in their products to consumers and wholesalers, including chemicals that hadn't been tested for safety in humans. (Both companies are declining to comment on the charges.)

The indictment paints a vivid picture of just how far USPlabs went to popularize bogus and dangerous supplements — supplements worth more than $400 million in sales. They're not the only supplement makers to sell "natural" products laced with illegal drugs. So the details are definitely worth a closer look and will give pause to anyone taking supplements.

The company passed off synthetic stimulants as "geranium flower powder"

The indictment focuses on two supplements put out by USPlabs — Jack3d and OxyElite Pro.

"One of the primary ways USPlabs sought to set its products apart from competitors was by its choices of ingredients, selling a dietary supplement called Jack3d, which was followed by a dietary supplement called OxyElite Pro in November 2009," the indictment reads.

Both of these products contained a chemical stimulant called DMAA, which the company had sourced form China. The problem was that DMAA is banned in the US, UK, and several other countries because it has been linked to strokes, heart failure and sudden death.

So the company allegedly figured out a workaround: pretend the chemical stimulant was actually a natural ingredient.

USPlabs CEO Jacobo Geissler and SK Laboratories vice president Sitesh Patel agreed that selling the plant-based ingredient would be easier than selling synthetic stimulants, since "regulatory agencies would be less likely to question the importation of plant extracts and because retailers would be more willing to sell a product that contained natural ingredients instead of synthetic ones," according to the indictment.

In a 2009 email to Geissler, Patel wrote that "China can just doctor us a [certificate of analysis] stating it’s an extract." This certificate, usually referred to as a "COA," is supposed to be sent from suppliers along with their raw ingredients to manufacturers to verify the contents, quality, and safety of the ingredient in the shipment.

The government argues that this deception was deliberate: "USPlabs and its principals embarked on an unmistakable course of conduct where, starting at least with DMAA, they imported numerous shipments of substances intended for human consumption using false and fraudulent COAS, and other false and fraudulent documentation and labeling."

In other words, the companies are accused of having Chinese chemical suppliers lie about what was in their ingredient shipments, pretending they were botanical extracts when they were really just lab-produced chemicals.

Those lies were then passed on to supplement wholesalers and consumers who were unknowingly putting untested synthetic chemicals in their bodies.

In one example, the companies had their Chinese suppliers create fake COAs that portrayed DMAA as having been extracted from "geranium flower powder." "These statements were false because USPlabs was using a stimulant from a Chinese chemical factory, not a substance extracted from geraniums," the indictment reads.

And executives knew this. As Patel told Geissler and USPlabs president Jonathan Doyle in an email: "lol stuff is completely 100% synthetic."

USPlabs kept selling dangerous supplements after being ordered to stop

The supplements that contained DMAA (Jack3d and OxyElite Pro) went on to become best-selling products in the United States, generating $400 million in sales between 2008 and 2013.

By the fall of 2013, a new formulation of OxyElite Pro went on sale, and shortly thereafter was linked to dozens of liver injuries across the US. In Hawaii alone, the state's public health agency later discovered, more than 40 people who had been taking OxyElite Pro were hospitalized for acute liver failure, hepatitis, and liver transplants, and one person died.

This prompted the FDA to ask USPlabs to pull the product from the market. But according to the indictment, instead of actually ceasing distribution of the product, the Department of Justice says the company "engaged in a surreptitious, all-hands-on-deck effort to sell as much OxyElite Pro as it could as quickly as possible."

USPlabs also allegedly knew about the supplement's potential for liver toxicity, the government said. But again, the company didn't properly test its products and instead made assumptions about their safety. In a weird twist, people who worked at the company are accused of simply testing products on themselves and then selling "the ones that made them feel good."

The DOJ is bringing criminal charges against Geissler, Patel, and four others

The US government is charging six executives at the two companies, including Geissler and Patel, with obstructing FDA law and conspiracy to commit money laundering. Four of these executives (who are still unnamed) were arrested on Tuesday, and two others self-surrendered.

Along with the arrests, the FDA and IRS seized assets in their investment accounts, their homes, and their luxury and sports cars.

The crackdown on USPlabs was part of a broader sweep of the supplement industry by six federal agencies. Federal prosecutors brought criminal and civil charges against more than 100 makers or marketers of bogus dietary supplements, targeting businesses and individuals in 18 states.

These government actions come in the absence of strong regulations for dietary supplements. Right now the FDA has to prove a product is dangerous in order to take it off the market instead of making sure products are safe before allowing companies to sell them to consumers. (You can read more about supplement regulation here.)

In one recent Centers for Disease Control and Prevention analysis, supplements cause an estimated 2,000 hospitalizations each year. Many of these were attributed to weight loss, fitness, and sexual enhancement supplements like the ones USPlabs was selling.

"From California to Maine, consumers ingest pills, powders, and liquids every day, not knowing whether they are wasting money or whether they may end up harming, rather than helping, themselves," said Benjamin Mizer, principal deputy assistant attorney general. "Unfortunately, many of these products are not what they purport to be or cannot do what the distributors claim they can do."