Substantial quantities of prescription drugs, including clinical cancer medications (Cancer drugs Avanstin and Altuzan to physicians in US)
In 2001, Manitoba, Canada-based Kristjan Thorkelson founded Canada Drugs as an online pharmacy based in Winnipeg, Canada. Canada Drug’s business model was based on illegally importing unapproved and misbranded prescription pharmaceutical drugs into the United States from abroad and selling the drugs illegally to consumers throughout the United States.
The drugs were illegally imported into the United States through the systematic use of fraudulent customs declaration forms, which consistently undervalued the price of the drug products in order to avoid detection by United States regulatory and law enforcement authorities. The role of Thorkelson was the Chief Executive Officer of Canada Drugs and, with other co-conspirators, he distributed within the United States substantial quantities of prescription drugs, including clinical cancer medications that were not approved by the United States Food & Drug Administration (FDA).
After approximately eight years of operating this illegal scheme, in 2009, Canada Drugs’ market was expanded to include acquiring prescription drugs, including life-saving cancer medication, intended for sale in foreign countries and illegally smuggling the drugs into the United States for distribution. As part of this expansion, Canada Drugs acquired other companies engaged in similar illegal prescription drug importation and distribution activities and used the brand names, drug inventories, and customer lists of those companies to further its illegal operation.
CANADA DRUGS conducted its clinical sales through several subsidiaries, including Rockley Ventures, Global Drug Supply and RIVER EAST which operated in United States, Canada, Barbados and United Kingdom. During the criminal investigation, it was discovered that entities affiliated with Canada Drugs had distributed in the United States counterfeit cancer drug Avastin (American version) and counterfeit cancer drug Altuzan (Turkish version). FDA Office of Criminal Investigation agents learned that executives and employees of Canada Drugs had systematically undervalued the declared value of each shipment of pharmaceutical drugs on customs forms in order to conceal the illegal importation of the unapproved and misbranded drugs into United States.
It was in approximately 2009, CANADA DRUGS began selling unapproved and misbranded prescription drugs directly to physicians and physician office practices in the United States. When Canada Drugs discovered that there had been a significant breach in its supply chain and it might be distributed counterfeit Avastin to physicians in the United States, they made no attempt to notify FDA or any other authorities.
The counterfeit Avastin distributed by Canada Drugs-affiliated entities was discovered in December 2011, when the United Kingdom Medicines and Healthcase Products Regulatory Agency notified the FDA of a potential counterfeit batch of oncology drug which River East Supplies had purchased from a supplier in the European Union.
From 2009 until 2012, CANADA DRUGS profited heavily from its criminal enterprise. During that time, CANADA DRUGS generated at least $78 million in gross proceeds from the illegal sale of unapproved new drugs, misbranded drugs and counterfeit drugs in the United States. Furthermore, CANADA DRUGS systematically moved its proceeds from accounts in the United States to accounts in Barbados, and then ultimately transferred the profits to accounts in Canada.
In total, CANADA DRUGS facilitated the transfer of at least $78,184,482 in gross proceeds from its illegal enterprise into bank accounts held by ROCKLEY VENTURES in Barbados.
The Defendants involved were the legal persons CANDADRUGS.COM, Rockley Ventures, Global Drug Supply, River East Supplies and the individuals Kristjan Thorkelson, Thomas Haughton, Ronald Sigurdson, Narinder Kaulder, Troy Nakamura, Darren Chalus.
They were convicted for:
As the direct result of the illegal conduct of Thorkelson, consumers and patients, including those needing life-saving chemotheraphy, were at risk of receiving drugs that were not approved by the FDA for use in the United States.
It was in December 2017 when the defendant, K.T. agreed to plead guilty to the superseding information, which charges the crime of Misprision of Felony. The United States and Thorkelson jointly request that the Court accept Thorkelson’s plea and plea agreement, and impose a sentence of 60 months probation, the first 6 months to be served under home detention, a fine in the amount of$250,000, a special assessment of $100, and additional conditions of probation, which include causing the permanent cessation of the sale of all unapproved, misbranded, adulterated, or counterfeit drugs in the United States and cooperating fully with the United States in this ongoing and future criminal prescription drug investigations.
CanadaUnited States of America
United Kingdom of Great Britain and Northern Ireland
Barbados167 packages of Avastin (400mg)
In total, CANADA DRUGS facilitated the transfer of at least $ 78,184,482 in gross proceeds from its illegal enterprise into bank account held by ROCKEY VENTURES in Barbados.
CanadaUnited States of AmericaUnited Kingdom of Great Britain and Northern IrelandBarbadosSix Canadian defendants (Thomas Haughton, Kristjan Thorkelson, Ronald Sigurdson, Darren Chalus, Troy Nakamura and James Trueman) were extradited in Manitoba and British Columba on June 14 and 15. (Extradition Act)
United States District Court of the District of Montana
In the proceeding related to Kristjan Thorkelson, the defendant agrees to plead guilty to the superseding information, which charges the crime of Misprision of a Felony in violation of 18 U.S.C &4. It carries the maximum punishment of three years imprisonment, a 250.000 dollars fine, one year supervised release, and a 100 dollars special assessment.
The defendant has been sentenced to the maximum punishment of three years imprisonment, a 250.000 dollars fine, one year supervised release, and a 100 dollars special assessment.
He is the Chief Executive Officer of Canada Drugs (CEO) and Director of Global Drug Supply (subsidiary of Canada Drugs).
The United States and Thorkelson jointly request that the Court accept Thorkelson’s plea and plea agreement, which governed the Rule 11(C)(1)(C), Federal Rules of Criminal Procedure.
The Government believes that the following disposition of the case against Thorkelson per the plea agreement entered into the pursuant to the Rule mentioned before, by a fair assessment of the advisory guideline calculations as well as the factors set forth in 18 U.S.C. & 3553 (a) and relevant case law
Misprision of a felony
Misprision of a felony
Misbranded drugs and devices and Prohibited acts
21 U.S.C. §§ 331(a). “Prohibited acts”
“The following acts and the causing thereof are prohibited:
(a) “The introduction or delivery for introduction into interstate commerce of any food, drug, device, tobacco product, or cosmetic that is adulterated or misbranded (…)””
21 U.S.C. §§ 352(c), 352(o), and 352(f) “Misbranded drugs and devices”
“352(c) Prominence of information on label
If any word, statement, or other information required by or under authority of this chapter to appear on the label or labeling is not prominently placed thereon with such conspicuousness (as compared with other words, statements, designs, or devices, in the labeling) and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use.”
“352(o) Drugs or devices from nonregistered establishments
If it was manufactured, prepared, propagated, compounded, or processed in an establishment not duly registered under section 360 of this title, if it is a drug and was imported or offered for import by a commercial importer of drugs not duly registered under section 381(s) of this title, if it was not included in a list required by section 360(j) of this title, if a notice or other information respecting it was not provided as required by such section or section 360(k) of this title, or if it does not bear such symbols from the uniform system for identification of devices prescribed under section 360(e) of this title as the Secretary by regulation requires.”
“352(f) Directions for use and warnings on label
Unless its labeling bears (1) adequate directions for use; and (2) such adequate warnings against use in those pathological conditions or by children where its use may be dangerous to health, or against unsafe dosage or methods or duration of administration or application, in such manner and form, as are necessary for the protection of users, except that where any requirement of clause (1) of this paragraph, as applied to any drug or device, is not necessary for the protection of the public health, the Secretary shall promulgate regulations exempting such drug or device from such requirement. Required labeling for prescription devices intended for use in health care facilities or by a health care professional and required labeling for in vitro diagnostic devices intended for use by health care professionals or in blood establishments may be made available solely by electronic means, provided that the labeling complies with all applicable requirements of law, and that the manufacturer affords such users the opportunity to request the labeling in paper form, and after such request, promptly provides the requested information without additional cost.”
Misbranded drugs and devices and Prohibited acts
Conspiracy to commit money laundering
18 U.S.C § 1956 (h) Laundering of monetary instruments
“(2) Whoever transports, transmits, or transfers, or attempts to transport, transmit, or transfer a monetary instrument or funds from a place in the United States to or through a place outside the United States or to a place in the United States from or through a place outside the United States -
(A)
with the intent to promote the carrying on of specified unlawful activity; or”
18 U.S.C § 1956 (a)(2)(A) International Money Laundering
(h) Any person who conspires to commit any offense defined in this section or section 1957 shall be subject to the same penalties as those prescribed for the offense the commission of which was the object of the conspiracy.
Conspiracy to commit money laundering
1) Sentenced to a period of probation of 60 months, with the first six months to be served under home detention;
2) Fine of $250,000
3) The Defendant shall cause his co-defendants, their subsidiaries, and other related entities to permanently cease all sales of unapproved, misbranded, adulterated, and counterfeit drugs in the United States within 90 days of sentencing date;
4) He shall cause his co-defendants, their subsidiaries, and other related entities to surrender to the United States all domain names and any legal rights to the use of the domain names used in the importation, sale, or distribution of unapproved, misbranded, adulterated and counterfeit drugs,
5) Not to disclose any customer information of individuals residing in the U.S to any other pharmacy or business outside of the United States;
6) Fully cooperate with the U.S in the ongoing criminal investigation and future criminal investigations of the importation, sale, or distribution of violative products,
7) Special assessment of $100
United States District Court of the District of Montana
This large-scale unapproved and misbranded prescription medical products smuggling scheme operated in four different countries and damaged multiple customers by their falsified medical products. The cancer drugs trafficking scheme did not have any active ingredient and their potential damages would result in serious consequences for the customers.
Founded in 2001, Canada Drugs was well known for selling low-cost medications. The counterfeit of the cancer medication Avastin to US doctors was the breach which dismantled this organized criminal group due to the notification to FDA. The FDA was notified after doctors at a Californian practice and, after the investigation, the authorities found out that the fake drugs came from an overseas supplier which also dismantled the CANADADRUGS’ importation network.
A separate plea agreement for Thorkelson would see him pay a $250,000 fine and serve six months of house arrest followed by four and a half years of probation. The deals would also require the company to surrender its domain names, hand over all information and permanently stop selling and distributing unapproved or misbranded drugs in the U.S. The defendants also can't share or sell any information on American customers to any other pharmacy or third party outside of the U.S.