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CEO Sentenced for Illegal Prescription Drug Sales on the Internet

On Feb. 3, Jared Wheat, CEO of Georgia-based Hi-Tech Pharmaceuticals, was fined $50,000 and sentenced to 50 months in prison. Wheat was accused of running a drug ring that manufactured, imported and illegally sold unauthorized prescription drugs on the Internet.

His sentence was the result of a rejected plea bargain his criminal defense attorneys negotiated with prosecutors. In January, the federal judge in the case refused to accept a plea bargain that would have put Wheat behind bars for 37 months. After the plea bargain was rejected, Wheat was given the option of going forward with a criminal trial or accepting increased penalties in a new plea bargain on Feb. 3.

According to The Atlanta Journal-Constitution, U.S. District Judge Jack T. Camp also ordered Wheat, Hi-Tech Pharmaceuticals and several other defendants charged in the case to forfeit approximately $3 million made from the illegal sale of the drugs.

Two of Wheat’s co-defendants, Sergio Oliveria and David Brady, also received prison sentences on Feb. 3 and were fined for their involvement in the scheme. Judge Camp had previously sentenced two other co-defendants in the case, Stephen D. Smith and Tomasz Holda, to prison. Several other co-defendants received sentences that did not include time behind bars.

In order to receive reduced sentences, the defendants confessed to manufacturing generic drugs and selling them to people without prescriptions.

Hi-Tech Pharmaceuticals is based in Norcross, Georgia and legally markets herbal products that claim to aid weight loss or increase sex drive. Investigators found that the company converted a four-bedroom home in Belize into a drug manufacturing plant where it produced unauthorized generic versions of prescription drugs such as Xanax, Valium, Ambien, Vioxx, Zoloft, Viagra and Cialis. The drugs were reportedly manufactured, imported and sold on the Internet without licensing from the patent-holders, safety and quality-control measures or the approval of the Food and Drug Administration.

Early in the case, prosecutors had also alleged Hi-Tech’s herbal dietary supplements were spiked with ephedrine alkaloids. The U.S. Food and Drug Administration banned ephedrine in 2004. This claim evaporated during plea negotiations.

MSNBC reported Wheat was initially accused of operating a “continuing criminal enterprise.” The charge comes under a racketeering statute generally used to prosecute organized crime syndicates. This charge could have landed Wheat in prison for a minimum of 20 years and required him to forfeit his company. Prosecutors also dropped the charge during plea negotiations.

The prosecution had also received information from confidential informants indicating Wheat, Smith and Holda had conspired to an FDA agent and blackmail a former assistant U.S. attorney general. These allegations came to light in court documents filed by prosecutors in response to Wheat’s request to be released on bond. However, charges for conspiracy to commit murder never materialized and these allegations were not mentioned in Wheat’s final plea deal.

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