Canadian Company and Drop Shipper Plead Guilty to Conspiracy to Smuggle and Sell Misbranded Prescription Pharmaceuticals

ALEXANDRIA, Va. – SB Medical Inc., and TC Medical Group, companies based in Toronto, Canada, and St. Michael, Barbados, along with Hanoch David Stein, 37, of Baltimore, Maryland, pleaded guilty today to a multi-year conspiracy to smuggle and sell misbranded prescription pharmaceuticals in the United States and unlicensed wholesaling of prescription drugs. During the conspiracy SB Medical Inc. and TC Medical Group received over $33 million in proceeds from the illegal smuggling and sale of misbranded prescription pharmaceuticals in the United States.

“The smuggling and distribution of misbranded drugs and medical devices of uncertain foreign origin has the potential for serious harm to patients,” said Dana Boente, U.S. Attorney for the Eastern District of Virginia. “They could be improperly stored and transported, ineffective, adulterated, or unsafe. With our law enforcement partners, we will aggressively investigate and prosecute those who illegally distribute such products.”

SB Medical Inc., TC Medical Group, and Stein were indicted by a federal grand jury on December 2, 2014. 

“Individuals who circumvent the FDA-regulated supply chain by distributing unapproved prescription drugs and medical devices put the health and safety of the American public at risk,” said George M. Karavetsos, Director, FDA Office of Criminal Investigations. “The FDA has zero tolerance for those who participate in these illegal trafficking networks and, as we did in this case, we will continue to protect consumers by bringing such criminals to justice.”

According to the statements of facts filed along with the plea agreements, the SB Medical Inc. organization from at least 2011 through 2014, smuggled orthopedic injections, rheumatology infusions, cosmetic devices, optomology products, and oncology drugs into the United States.  The non-FDA approved prescription pharmaceuticals were sourced from other foreign countries including India, Turkey, France, Italy, and other countries and included Lucentis, Mabthera, Botox, Dysport, Euflexxa, Remicade, Restylane, Synvisc, Prolia, Orencia, Orthovisc, and other products.

“The illegal smuggling and sale of misbranded prescription pharmaceuticals can pose life threatening consequences for consumers,” said Clark E. Settles, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Washington, D.C. “Our agents work tirelessly to protect the American public from criminals who disregard health and safety warnings solely to make a buck.”

Members of the conspiracy working for SB Medical Inc. and TC Medical Group used false names to sell the pharmaceutical products to doctors and clinics in the United States.  To smuggle pharmaceuticals across the United States border, large shipments were broken down into multiple small shipments.  Those shipments were sent to addresses in Maryland, New Jersey, Florida, and other locations under different false names over several days.  Customs forms falsely stated the contents and value of the shipments.  Drop shippers in the United States, including Stein, received these packages, removed indicia that they were from abroad, and re-shipped them to doctors and clinics in the United States so that packages would have a United States-based return address.

“This case serves as a perfect example of what can be accomplished when different law enforcement agencies partner together to protect the American public from the many perils of illegal prescription drugs,” said Acting Postal Inspector in Charge David M. McGinnis, U.S. Postal Inspection Service-Washington Division. “It is our duty as Postal Inspectors to investigate and stop those who attempt to ship illicit drugs through the U.S. Mail.”

Instead of storing pharmaceuticals at cool temperatures as required for many of the pharmaceuticals, members of the conspiracy used unregistered commercial mailboxes, residential backyards and porches, basement rooms, garages, kitchen fridges and freezers, which did not have adequate lighting, ventilation, temperature, humidity, and security as required for the safe storage and handling of the prescription drugs and devices.

To further deceive customers about the actual location of SB Medical Inc. and the foreign origin of the pharmaceuticals, members of the conspiracy further asked that customers send checks to locations in the United States; drop shippers bundled the checks and forwarded them to Canada where they would be cashed.

This investigation has resulted in the guilty pleas of other conspirators of SB Medical Inc. and TC Medical Group, including:

• David Eli Burke, 34, of Thornhill, Ontario, Canada, director of sales
• Shlomo David Rabi, 25, of Toronto, Ontario, Canada, director of sales and marketing
• Asaf Akiva Ibrahimian, 24, of West Orange, New Jersey, sales representative
• Reuven Daniel Mirlis, 23, of Passaic, New Jersey, sales representative
• Rivka Rabi, 26, of Lakewood, New Jersey, drop shipper

Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; George M. Karavetsos, Director, FDA Office of Criminal Investigations, Clarke E. Settles, Special Agent in Charge of Homeland Security Investigations , Washington, D.C.; and David M. McGinnis, Inspector in Charge of the U.S. Postal Service-Washington Division, made the announcement after the pleas were accepted by U.S. District Judge Anthony J. Trenga.

This case was investigated by the FDA’s Office of Criminal Investigations, Homeland Security Investigations Washington, D.C., and the United States Postal Inspection Service. Assistant U.S. Attorneys Alexander T.H. Nguyen, Kellen S. Dwyer, and Jay V. Prabhu are prosecuting the case.

A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-cr-397.