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United States v. Patel

United States District Court, W.D. Virginia, Abingdon Division

February 23, 2017

UNITED STATES OF AMERICA
v.
SITESH BANSI PATEL, Defendant.

          Randy Ramseyer, Assistant United States Attorney, Abingdon, Virginia, for United States;

          Patrick Q. Hall, Law Offices of Patrick Q. Hall, San Diego, California, and Christopher K. Kowalczuk, Law Offices of Christopher K. Kowalczuk, Roanoke, Virginia, for Defendant.

          OPINION AND ORDER

          James P. Jones United States District Judge

         In this criminal case, in which the defendant is accused of several conspiracy and fraud offenses relating to alleged misbranding of drugs, the defendant has moved to dismiss the charges against him. His first Motion to Dismiss argues that each of the Indictment's two conspiracy counts is duplicitous, alleging two separate conspiracies per count rather than one continuous conspiracy in each count. His second Motion to Dismiss is based on the presentation of false testimony to the grand jury, which he contends renders the Indictment defective. For the following reasons, I will deny both motions.

         I.

         The Indictment sets forth the following allegations that are pertinent to the Motions to Dismiss.

         Defendant Sitesh Bansi Patel was vice president of SK Labs, Inc. (“SK Labs”). Guillermo “Willy” Ramos was president of Human Tech Sport Nutrition Company (“Human Tech”). Steve Wood was the president and owner of Competitive Edge Labs, LLC and controlled MKZ Exports, LLC.

         Count One alleges that between 2008 and August, 2011, Patel, Ramos, and Wood conspired, with intent to defraud and mislead, to: (i) introduce a misbranded drug into interstate commerce, in violation of 21 U.S.C. §§ 331(a) and 333(a)(2); (ii) receive a misbranded drug in interstate commerce, in violation of 21 U.S.C. §§ 331(c) and 333(a)(2); and (iii) fail to register with the FDA and provide required information, in violation of U.S.C. §§ 331(p) and 333(a)(2). Count One further charges Patel with conspiracy to defraud the United States by impeding the lawful functions of the Food and Drug Administration of the Department of Health and Human Services.

         Specifically, Count One alleges that Wood imported raw drug components from China in order to manufacture M-Drol and H-Drol, which were synthetic steroids or pro-hormones mislabeled as dietary supplements. In 2008 and 2009, Wood had raw drug powders shipped directly to SK Labs, and SK Labs then encapsulated and bottled the products and shipped them to Wood.

         At some point, the manufacturing ceased. In December, 2010, Wood contacted Patel and requested that SK Labs restart the manufacture of M-Drol and H-Drol. Patel indicated that he did not want SK Labs to manufacture M-Drol and H-Drol, but he agreed to find someone else who would manufacture them. Patel subcontracted with Ramos to manufacture M-Drol and H-Drol for Wood. Patel and Wood agreed to have the materials shipped directly to Patel for the initial orders. Between December, 2010, and August, 2011, Ramos manufactured the pills and sent them to Wood. Wood paid Patel a finder's fee in cash. Wood also sent cashier's checks to Patel that were payable to Human Tech and were later deposited in Ramos's account.

         Count Two alleges that from 2008 through August, 2011, Patel, Ramos, and Wood conspired to violate 18 U.S.C. § 1341 - that they devised a scheme to defraud and obtain money by false pretenses, and they caused delivery, by mail or interstate commercial carrier, of items for the purpose of executing their scheme. Specifically, the government alleges that they falsely represented, on product labels and otherwise, that H-Drol and M-Drol were dietary supplements rather than drugs. The raw drug powders were placed in international mail and then delivered by UPS. The Chinese source hid the powders in the bottoms of shipping containers to avoid detection by customs officials. The source also falsified shipping manifests and waybill mailing labels, declaring that the contents of the containers were legal and the value was less than actually paid.

         Counts Three, Four, and Five set forth three individual instances of mail fraud that allegedly occurred on August 16, 2011, August 23, 2011, and August 29, 2011.

         Patel has filed two Motions to Dismiss, which have been briefed and orally ...


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