A federal jury in Atlanta has convicted Jared Wheat, the founder and CEO of Hi-Tech Pharmaceuticals, Inc., and his company of wire fraud for fabricating documents to deceive customers about compliance with industry manufacturing standards. The verdict follows a six-week trial in which prosecutors detailed how Wheat and Hi-Tech created false certifications to suggest the company met Good Manufacturing Practices (GMP), as required by the Food and Drug Administration (FDA).
U.S. Attorney Theodore S. Hertzberg stated, “After two prior federal felony convictions, Wheat yet again put profits over product quality and consumer safety by forging documents purporting to show that an independent, third-party audit company had certified Hi-Tech as complying with Good Manufacturing Practices. As a result of the defendants’ deceit, Hi-Tech received millions of dollars from customers who relied on the fabricated documents. The defendants’ fraudulent scheme was uncovered through years of dedicated investigation and collaboration among law enforcement partners, and the verdict signals that companies that lie will face stern consequences.”
The FDA does not certify dietary supplement companies for GMP compliance; instead, manufacturers often seek certification from independent auditors for marketing purposes. In 2010, Hi-Tech hired a reputable audit firm that found significant deficiencies at its Norcross, Georgia facility—75 categories were non-compliant with GMP standards. These included gaps in doors allowing rodents access, products exposed to contaminants before packaging, and inadequate testing protocols.
Rather than addressing these issues, Wheat and Hi-Tech produced a forged certificate in 2011 claiming GMP compliance from PharmaTech Consulting—a company owned by Wheat himself—and used one of his former attorneys’ names without consent. They also altered inspection reports to falsely indicate favorable results.
Hi-Tech further fabricated FDA export certificates known as Certificates of Free Sale by changing dates and product names. Between 2011 and 2013, these falsified documents were sent to customers domestically and abroad; some foreign regulators approved Hi-Tech’s products based on these fraudulent certifications. During this period, customers paid more than $4.7 million to Hi-Tech.
“Making fraudulent claims about FDA-regulated products shows a reckless disregard for public health and safety,” said Kelly McCoy, Acting Special Agent in Charge at the FDA Office of Criminal Investigation. “We remain committed to pursuing and bringing to justice those who misrepresent key aspects of their products to unsuspecting customers.”
Demetrius Hardeman, Special Agent in Charge at IRS Criminal Investigation’s Atlanta Field Office added: “Hi-Tech’s conviction for money laundering provides the expected outcome for any business engaging in this illegal activity. IRS-CI special agents are experts at following the money to uncover the various money laundering schemes carried out by business entities or criminals to hide illegal profits, including their use of layering, cyber laundering, and shell companies.”
Wheat was previously convicted on federal charges related to drug trafficking conspiracy in Alabama (1991) as well as mail/wire fraud involving unapproved drugs in Georgia (2009). He now faces up to 20 years imprisonment plus three years supervised release following this latest conviction for wire fraud.
Hi-Tech Pharmaceuticals was also found guilty on counts including wire fraud conspiracy and money laundering conspiracy; it could be fined up to twice the value of criminal proceeds—potentially nearly $10 million—and placed on probation for up to five years.
Sentencing before U.S. District Judge Amy Totenberg has not yet been scheduled.
The case was investigated by both FDA Office of Criminal Investigations and IRS Criminal Investigation units; prosecution is being handled by First Assistant United States Attorney Nathan P. Kitchens along with Assistant United States Attorney Kelly K. Connors.
Further information can be obtained from the U.S. Attorney’s Public Affairs Office or via http://www.justice.gov/usao-ndga.
