Criminal Contempt for Allegedly Storing Dietary Supplements Under Insanitary Conditions

By Susan J. Matthees –

The DOJ has announced that a New Jersey jury found two dietary supplement companies and their owner and managers guilty of criminal contempt for allegedly violating a Consent Decree that had enjoined them from engaging in certain conduct.
 
In 2009, the government filed a complaint against Mohamed Desoky and his companies, Quality Formulation Laboratories, Inc. (“QFL”), and American Sports Nutrition, Inc., for allegedly introducing into interstate commerce dietary supplements that were adulterated and misbranded.  The products were allegedly produced under insanitary conditions (for instance, an FDA investigator claimed to have noted numerous live and dead rodents in the manufacturing area), and the product labels allegedly failed to disclose a major food allergen.  Mr. Desoky and his companies entered into a Consent Decree of Permanent Injunction in 2010 that restrained and enjoined them from directly or indirectly receiving, manufacturing, preparing, packing, labeling, and distributing any article of food, including dietary supplements, until certain conditions had been met and FDA provided written notification of authorization to resume operations.

Shortly after the Consent Decree was signed, FDA agents conducted an inspection of QFL’s facility and allegedly found evidence that some manufacturing and packing continued at the facility after the Consent Decree was signed, even though FDA claimed that it had not authorized the facility to reopen.  FDA also found that employees were being transported from the QFL facility to a new facility in order to continue manufacturing, packing, and shipping dietary supplements.  As a result, the government filed criminal contempt charges against Mr. Desoky, his companies, and his sons, who allegedly helped Mr. Desoky set up his new facility even though they knew about the Consent Decree.  

In September 2010, even after being charged with criminal contempt, QFL allegedly continued operations without FDA’s approval, and shipped finished product to at least one customer.  An undercover FDA agent performed a pick-up of finished food products from QFL in January 2011, and one of Mr. Desoky’s sons allegedly loaded the truck for distribution.  After contempt charges were filed, the case went to trial in the District of New Jersey, and a jury returned a guilty verdict. 

It is often thought that companies and their executives can end their disputes with FDA by entering into a Consent Decree.  In fact, FDA often shifts its resources from companies that FDA has sued to other companies once the company that has been sued settles the case.  However, this case shows that FDA can and sometimes does pursue contempt sanctions against persons who FDA believes have violated the terms of a Consent Decree.  As a result, companies entering into Consent Decrees must be prepared to understand and follow FDA’s interpretation of a Consent Decree or risk contempt sanctions if the company fails to do what FDA is expecting the company to do.  Alternatively, a company and its executives can litigate the injunction suit by not signing a Consent Decree.  Contempt sanctions can be very serious, including possible jail time and heavy fines.

This case may also be an indication that FDA intends to take dietary supplement GMPs seriously and will be vigilant to go after dietary supplement manufacturing facilities.  Dietary supplement GMPs became effective in June 2008 for large companies, June 2009 for medium companies, and June 2010 for companies with fewer than 20 employees.  Last year, FDA issued its first Warning Letter for alleged violations of dietary supplement GMPs, and last month dietary supplement GMPs survived a court challenge.  This case may be one of many future challenges against firms that allegedly manufacture dietary supplements in violation of GMP regulations.