From the U.S. Attorney:
Suburban Chicago Medical Device Company to Pay $1 Million to Resolve Federal Fraud Investigation
CHICAGO — A suburban Chicago medical device company has agreed to pay a $1 million fine to resolve a federal criminal investigation into the alleged selling of misbranded products imported from overseas.
Mokena, Ill.-based ADVANCED INVENTORY MANAGEMENT, INC. admitted in a Statement of Facts filed in U.S. District Court in Chicago that the company imported medical products from international distributors at cheaper prices than what it would have paid to U.S. distributors.
Once the products arrived in the U.S., company employees – under the direction of its sole owner and Chief Executive Officer, ANTHONY IADEROSA, 52, of Mokena, Ill. – used a hair dryer to remove labels that had cautioned the products were only available for resale in a specified country and not in the United States.
The company then re-sold the products to customers in the U.S. at a substantial markup, resulting in profit margins of 35% to 50%.
In total, AIM admitted that it made profits of approximately $500,000 by employing this tactic.
The investigation of AIM and Iaderosa is being resolved with deferred prosecution agreements, under which the company and Iaderosa admitted that the tactic rendered the products misbranded under the U.S. Food, Drug, and Cosmetic Act.
The company and Iaderosa further admitted that they deliberately concealed the tactic from the U.S. Food and Drug Administration and caused false statements to be submitted to customs agents.
The U.S. Attorney’s Office filed a one-count criminal information charging AIM and Iaderosa with misbranding of a medical device with the intent to defraud.
Under the agreements, the government will defer prosecution on the charge against AIM for three years and the charge against Iaderosa for one year, and then seek to dismiss the charges if the company and Iaderosa abide by certain conditions.
Among other things, the company agreed to pay a $1 million fine to the Department of Justice and implement a new compliance and ethics program designed to prevent violations of federal food and drug laws, as well as provide annual reports to the government regarding remediation and implementation of the program.
If AIM or Iaderosa fail to completely fulfill each of their obligations during the terms of the agreements, the U.S. Attorney’s Office can initiate prosecution of the charged offenses.
The charges and the deferred prosecution agreements were announced by Morris Pasqual, Acting United States Attorney for the Northern District of Illinois, and Ronne Malham, Special Agent-in-Charge of the Chicago Field Office of the FDA, Office of Criminal Investigations. The government is represented by Assistant U.S. Attorney Jared Hasten.
