Operation Phony Pharm: Six Charged As A Result Of Investigation

Kevin J. O’Connor, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, today announced charges that have been brought against six individuals as a result of Operation Phony Pharm, an undercover investigation targeting the illegal sale of anabolic steroids, human growth hormone, and other controlled substances over the Internet.

In April 2006, the FBI’s Healthcare Fraud Unit in the District of Connecticut, initiated Operation Phony Pharm. Using several sophisticated investigative techniques, this initiative, which has included the assistance of the United States Postal Inspection Service, the Food and Drug Administration’s Office of Criminal Investigations, and the Drug Enforcement Administration, has targeted web sites and individuals who are selling Schedule II and III pharmaceuticals over the Internet without a doctor’s consultation or a legitimate legal written prescription. Operation Phony Pharm also sought to identify and close down underground laboratories in the U.S. that are making these drugs from raw materials obtained from outside the U.S.

“The dangers associated with the improper use of steroids and human growth hormone are well documented,” U.S. Attorney O’Connor stated. “However, this investigation has helped to shed light on additional troubling concerns, including the manufacture of these drugs in unsanitary kitchen and basement labs, and their subsequent sale on web sites, many of which are frequented by minors. Recently, the federal penalties for the manufacture, distribution and possession of anabolic steroids and HGH have increased, and we and our federal law enforcement partners will vigorously investigate and prosecute the unlawful trafficking and use of these substances in order to deter their use.”

In an Indictment unsealed on Friday, September 21, EDWIN F. PORTER, 41, of Chandler, Ariz.; MATTHEW J. PELTZ, 36, of Chandler, Ariz.; TYLER J. LUNN, 27, of Phoenix, Ariz.; and WALTER T. COREY, 37, of Cherleroi, Penn., are each charged with one count of conspiring to distribute anabolic steroids, and two counts of distribution of anabolic steroids. The Indictment alleges the defendants purchased raw steroid powder from China, manufactured anabolic steroids in home laboratories in both oral and injectable form, and distributed them to customers around the country through a MySpace.com profile and an Internet web site they created, www.anabolic-superstore.com.

If convicted, PELTZ, LUNN and COREY face a maximum term of imprisonment of 15 years and a fine of up to $750,000. As PORTER has also been charged with one count of making a false statement to the FBI during the course of this investigation, he faces a maximum term of imprisonment of 20 years and a fine of up to $1,000,000.

Also on Friday, BRIAN S. TOMPKINS, 29, of Deltona, Fl., pleaded guilty in Hartford to one count of distribution of anabolic steroids. TOMPKINS admitted that, from September 2006 to July 2007, he distributed anabolic steroids by mail to individuals who contacted him through his MySpace.com profile. He further admitted that, in July 2007, he purchased two kilograms of steroid powder from a supplier in China.

Earlier today, ALAN R. BLAIR, 52, of Wilton, Conn., pleaded guilty in Hartford to one count of distributing Human Growth Hormone without a prescription. BLAIR admitted that, from approximately November 2004 to April 2007, he distributed HGH to customers throughout the world using the web site www.jintropin.com. The HGH was shipped directly to BLAIR’s customers from a supplier in China. As part of his guilty plea, BLAIR has agreed to forfeit to the Government approximately $260,000 of illegal proceeds generated as a result of his operation.

TOMPKINS and BLAIR are each scheduled to be sentenced by United States District Judge Christopher F. Droney in December, at which time they face maximum terms of imprisonment of five years and fines of up to $250,000.

In December 2006, as a result of Operation Phony Pharm, a seventh defendant, Hiroshige Cranney, 25, of San Francisco, Calif., was charged with selling anabolic steroids through the Internet website www.sell.com. The steroids, which include dianabol, winstrol, deca-durabolin, anavar, testosterone, anadrol, and turanabol, were sold to buyers in Connecticut and around the country. The case was transferred to the Northern District of California, and, in August 2007, Cranney pleaded guilty to one count of illegal sale of anabolic steroids.

“I want to acknowledge the ongoing efforts of the U.S. Postal Inspectors, FDA, DEA and other law enforcement agencies who are diligently working to disrupt the illegal production and trafficking of anabolic steroids and HGH,” stated FBI Special Agent in Charge Mertz. “Operation Phony Pharm is an ongoing investigation, additional targets have been identified, and we expect more arrests.”

During the course of Operation Phony Pharm, the FBI became aware of Operation Raw Deal, an international investigation led by the Drug Enforcement Administration that was targeting the underground manufacture, conversion and trade of anabolic steroids. Since that time, Operation Phony Pharm and Operation Raw Deal have provided mutual assistance as these investigations have evolved.

Operation Raw Deal has focused on raw material manufacturers/suppliers in China and other countries; underground anabolic steroid laboratories in the United States, Canada and Mexico; numerous U.S.-based websites distributing materials, or conversion kits, necessary to convert raw steroid powders into finished product; and Internet bodybuilding discussion boards that are the catalysts for individuals to learn how to illicitly use, locate and discreetly purchase performance enhance drugs, including anabolic steroids. Many of the underground steroids labs targeted during this investigation advertise and are endorsed on these message boards.

Today, the United States Department of Justice announced that Operation Raw Deal, together with the charges announced today in Connecticut, represents the largest steroid enforcement action in United States history. As part of Operation Raw Deal, 143 federal search warrants were executed on targets nationwide, resulting in 124 arrests and the seizure of 56 steroid labs across the United States. In total, 11.4 million steroid dosage units were seized, as well as 242 kilograms of raw steroid powder of Chinese origin. As part of Operation Raw Deal, $6.5 million also was seized, as well as 25 vehicles, three boats, 27 pill presses, and 71 weapons. Enforcement activity took place in 27 states.

Approximately 50 people were arrested and 61 federal search warrants were executed on targets nationwide during the operation’s final takedown, which began on Sept. 14, 2007. The U.S. operation took place in conjunction with enforcement operations in Mexico, Canada, China, Belgium, Australia, Germany, Denmark, Sweden, and Thailand.

“Whenever someone uses the U.S. Mail to send anything that they know is dangerous, illegal or counterfeit, postal inspectors are prepared to find them and arrest them in order to preserve the integrity of the mail,” said Chief Postal Inspector Alexander Lazaroff of the United States Postal Inspection Service. “I am proud to partner in this operation to stop the suppliers of anabolic steroids and the customers who purchase them, so that the mail will not be an ingredient in this deadly recipe.”

According to the charges filed in connection with these investigations, worldwide manufacturers of the raw materials needed for steroids use websites to market their products and even provide guidance to potential customers. Steroid Internet message boards and chat rooms also use the latest technology in an effort to keep their business transactions – and those of their customers – anonymous. These web sites, chat rooms, and message boards also provide information about how to convert the raw material into finished steroid product and boast of their ability to resist law enforcement scrutiny. In addition, these sites promote and often sell “conversion kits” that allow customers to convert raw materials into steroids themselves from home. Besides steroids, many websites targeted also offered other dangerous drugs and chemicals such as ketamine, fentanyl, ephedrine, pseudoephedrine, and GHB.

“The FDA Office of Criminal Investigations takes this illegal conduct very seriously and fully supports the investigation and ultimate prosecution of these profiteers who endanger the public by formulating and selling unapproved illegal drugs, even when those who would be endangered are willing participants. These buyers are solely motivated by a desire to gain an unfair competitive advantage by using illegal performance-enhancing substances and the sellers are not concerned with the buyers' health but with making money,” said Terry Vermillion, Director of the FDA Office of Criminal Investigations.

U.S. Attorney O’Connor stressed that an indictment is only a charge and is not evidence of guilt. Each defendant is entitled to a fair trial at which it is the Government’s burden to prove guilt beyond a reasonable doubt.

Operation Phony Pharm is being prosecuted by Assistant United States Attorney Edward Chang of the U.S. Attorney Office’s Computer Hacking and Intellectual Property Unit.

DOJ - Cybercrime Unit
via Scam Fraud Alert