Tuesday, January 31, 2017

Three Individuals Arrested and Charged in South Dakota Fraudulent Medical Device Scheme Fourth Defendant Agrees to Plead Guilt

The Justice Department, in conjunction with the U.S. Postal Inspection Service, announced today that three individuals have been arrested on charges related to their involvement in a scheme to defraud consumers with regard to a medical device that they marketed as a treatment for over 200 different diseases and disorders, and for violating a judicial order that was previously imposed after this scheme was originally uncovered.

Over the weekend, U.S. Postal Inspectors arrested Rapid City, South Dakota residents Robert “Larry” Lytle, 81, and Fredretta L. Eason, 76, and Canada resident Irina Kossovskaia, 62, after the three were indicted by a federal grand jury in Rapid City, South Dakota. Lytle and Kossovskaia are charged with mail fraud, wire fraud, conspiracy, contempt, and obstruction of government proceedings. Eason is charged with criminal contempt. A fourth individual, Ronald D. Weir, 38, also of Rapid City, agreed to plead guilty on Monday to related conspiracy charges contained in a separate criminal information that was filed with the U.S. District Court for the District of South Dakota. These charges follow a separate civil enforcement action brought by the United States against Lytle and his QLaser businesses in late 2014.

As alleged in the charging documents and in filings from a prior civil case, Lytle, Kossovskaia, and Weir marketed and distributed “QLasers,” a collection of hand-held light-emitting devices that they falsely claimed could safely and effectively treat a panoply of medical conditions at home, including cancer, cardiac arrest, HIV, diabetes, and even Lou Gherig’s disease. The use of the QLaser to treat such serious conditions is unsupported by any published clinical, scientific studies, and not approved by the U.S. Food and Drug Administration (FDA). The defendants sold the devices alone and in combination packages mostly to elderly consumers for prices that ranged from approximately $4,000 to $13,000. To convince consumers of their claim that the device was able to “help almost every health problem ever experienced by a human being,” promotional material for the QLaser referred to the device’s inventor as “Dr. Larry Lytle, D.D.S., Ph.D.” to create the false impression that he was especially knowledgeable, scientifically competent, credible and authoritative. In reality, Lytle’s license to practice dentistry was permanently revoked for engaging in fraud and material deception and his claimed “Ph.D.” in “nutrition” is not legitimate.

In 2015, during the civil case against Lytle, the federal court concluded that the QLaser’s labeling was not only false and misleading, but also that using the device could actually be dangerous when used as Lytle directed. As a result, the court ordered Lytle and anyone acting in concert and participation with him to cease distributing the devices. The defendants’ disobedience of the court’s orders is the basis of the criminal contempt charges contained in the indictment. In addition to criminal contempt, mail fraud, and wire fraud, the grand jury also charged Lytle with obstruction of the FDA by making false statements and providing false documents during the agency’s inspections of his QLaser business.

In accordance with a plea agreement with Weir, the government charged him in a criminal information with one count of conspiracy to introduce misbranded medical devices into interstate commerce with the intent to defraud and mislead. The information accuses Weir of conspiring with Lytle and others to market and distribute QLasers through a company called “Laser Wellness.”

“As the indictment alleges, these individuals targeted vulnerable citizens for years, preying on weaknesses brought about by chronic illnesses and fear of death—all to enrich themselves, and even where the scheme entailed violating a direct court order to stop,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This prosecution further demonstrates the Department’s ongoing commitment to protecting older Americans from fraud and abuse.”

“This indictment represents the government’s commitment to protecting consumers from unethical and predatory businesses,” said U.S. Attorney Randolph J. Seiler of the District of South Dakota. “In cases like this, prosecutorial measures are the only recourse when a business repeatedly demonstrates blatant disregard for the law, and potentially jeopardizes the health and safety of its consumers.”

“The U.S. Postal Inspection Service is committed to ensuring that these types of predatory schemes are investigated aggressively,” said U.S. Postal Inspector in Charge Craig Goldberg of the Denver Division, which covers multiple states including South Dakota. “It is imperative that we continue to protect those vulnerable individuals in our society who unknowingly fall prey to these schemes. We cannot allow fraudsters to utilize the U.S. mail to further their schemes.”

In addition to fines, each count of mail and wire fraud in the indictment carries a statutory maximum sentence of 20 years’ imprisonment. Each of the conspiracy and obstruction counts carries a maximum sentence of five years imprisonment. There is no statutory maximum penalty for criminal contempt.

The criminal investigation has been conducted by the U.S. Postal Inspection Service. The case is being prosecuted by Trial Attorney Ross S. Goldstein of the Justice Department’s Consumer Protection Branch and Assistant U.S. Attorney Ted McBride of the U.S. Attorney’s Office for the District of South Dakota.

The details contained in indictments and informations are allegations. The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

U.S. Marshals Operation 'Smoke Shops Get Crushed'

Albuquerque, NM - The U.S. Marshals Service in the District New Mexico, with the assistance of the City of Albuquerque, will destroy a large quantity of forfeited drug paraphilia. The drug paraphernalia was seized from numerous “smoke shops” and “head shops” located in Albuquerque, Roswell, Hobbs, and west Texas. The paraphernalia was seized in connection with federal investigations into “spice” and synthetic cannabinoids led by the DEA in collaboration with the FBI and their state and local law enforcement partners, which resulted in cases prosecuted by the U.S. Attorney’s Office. During the investigations, search warrants were executed at “smoke shops” and “head shops” leading to the seizure of drug paraphernalia, including glass bongs, glass pipes, and other glassware used to ingest illegal narcotics along with packaging material. In addition to the drug paraphernalia, proceeds from the sale of the illegal sale of “spice” and synthetic cannabinoids and drug paraphernalia were seized and forfeited to the United States Government.

The U.S. Marshals Service is the primary custodian of seized and forfeited property for the Department of Justice’s Asset Forfeiture Program. The asset forfeiture authority is used to remove the financial incentives from crime, depriving criminals of the cash and other assets they rely upon to facilitate their illegal activity against our society, thereby dismantling criminal organizations. These operations make New Mexico a safer place to live and raise families.

The destruction of the drug paraphernalia will take place January 27, 2017 at 2:00 pm at the City of Albuquerque Solid Waste Facility located at, 18000 Cerro Colorado S.W. Albuquerque N.M. There will be an opportunity to take photos of the items to be destroyed immediately before the destruction and the media will be able to film the destruction. U.S. Attorney Damon P. Martinez, Mayor Richard J. Berry, DEA Assistant Special Agent in Charge Sean R. Waite and Assistant Special Agent in Charge Derek A. Fuller will join U.S. Marshal Conrad E. Candelaria in making brief remarks and answering questions immediately before the drug paraphernalia is destroyed.

New Mexico’s Most Wanted Violent Offender Stopped at the Border

Albuquerque, NM - Yesterday, Customs and border protection arrested New Mexico Most Wanted Fugitive Margarito Ruiz (35) while trying to cross into the United States at the Laredo port of entry. Ruiz was wanted by New Mexico ATF on federal charges stemming from the sale of firearms and distribution of illegal narcotics. Ruiz was charged with being a felon in possession of a firearm and ammunition, and distribution of methamphetamines, 50 grams or more. Ruiz has a history of assault/battery and burglary.

Ruiz was immediately placed under arrest by U.S. Customs and Border Protection and was booked into the Web County jail without incident. Ruiz is a confirmed New Mexico Gang Member. Ruiz will be extradited to Albuquerque, New Mexico.