Between December 2006 and May 2007, large quantities of falsified prescription-only medicines entered the United Kingdom wholesale pharmaceutical market. The medicines were purportedly French medicines that had previously been for sale in France. In reality, the medicines were manufactured in China and imported to the United Kingdom via Hong Kong SAR, Singapore and Belgium.
The falsified medicines in this case were Casodex (bicalutamide), a treatment for advanced prostate cancer; Plavix (clopidogrel), a treatment for ischemic heart disease, used to prevent heart attacks; and Zyprexa (olanzapine), a treatment for schizophrenia, bipolar disorder and other severe mental conditions.
The defendant, Peter Gillespie, ran a UK-based company by the name of Consolidated Medical Supplies (CMS). He did so in breach of an order disqualifying him from acting as a company director. He acquired medicines from a company he owned and operated in Luxembourg by the name of Kirchberg Handels GmBH. This company did not hold a European Economic Area (EEA) wholesale dealer’s licence. This company also purported to obtain goods from certain companies in Mauritius which did not hold wholesale dealers’ licences. The falsified medical products in this case had been purchased by Kirchberg Handels GmBH for GBP 1.4 million and were to be sold as legitimate medical products with a retail value of GBP 4.7 million.
The offending in this case took place over the course of nine importations. The imported medicines were delivered to warehouses of CMS disguised as parallel-traded medicines. The defendant then altered the presentation of the medicines. At CMS premises in Basingstoke, UK, he caused vignettes (that is, stickers) for each medicine to be printed by a specialist printer. Such vignettes were required for eligibility for a reimbursement scheme in France. Additionally, the medicines were packed in cardboard packing boxes that had been procured to match as closely as possible the brown packing boxes used by the genuine manufacturer. Finally, white stickers with French text were applied on the outside of the cardboard packing boxes. Each of these steps was taken by the defendant to give the impression to purchasers that the medicines had been procured in France and were genuine French medicines. The medicines were then sold to unaware licensed wholesalers who supplied the medicines in good faith to hospitals, clinics and care homes. In total, 72,000 packs containing 2.1 million doses of falsified medicines entered the UK supply chain.
On 8 April 2011, Mr Gillespie was convicted and sentenced in the Crown Court at Croydon of one count of conspiracy to defraud, three counts of supplying a medicinal product without marketing authorisation, three counts of selling counterfeit goods, and one count of acting as a company director when disqualified. He was sentenced to a total of eight years’ imprisonment. A subsequent appeal against conviction and sentence in the Court of Appeal of England and Wales was unsuccessful.
中国
新加坡大不列颠及北爱尔兰联合王国
比利时
卢森堡
毛里求斯The investigation in this case, Operation Singapore, ran for three and a half years and involved 12 countries. This case was investigated by the Medicines and Healthcare Products Regulatory Agency (MHRA) of the United Kingdom. The case had been brought to the MHRA’s attention in May 2007 after a licensed re-packager noticed that one number on a blister package had been printed in reverse. Parallel to this, a patient taking an anti-psychotic medicine had also reported to the MHRA that a number on the tablet had rubbed off.
By May 2007, Mr Gillespie was aware that he was being investigated by the Medicines and Healthcare Products Regulatory Agency (MHRA) of the UK. He did not assist the MHRA with its investigation and did not inform it of other batches of Plavix, Zyprexa and Casodex which had entered the UK pharmaceutical system. He also continued to sell unsold stock of the three falsified medicines after the commencement of the MHRA’s investigation.
Mr Gillespie actively took steps to obstruct the investigation of the MHRA. The Basingstoke premises of CMS had been gutted to remove incriminating evidence, including unused rolls of vignettes. The appellant’s computer was never recovered by investigating authorities, although a search of his home revealed a space and associated cables where it appeared a computer had been situated.
Following the MHRA investigation, more than half of the 2.1 million falsified doses were seized by the MHRA. Almost 900,000 doses reached pharmacies and patients. The MHRA carried out four Class 1 recalls of seven batches of Plavex, Zyprexa and Casodex which resulted in the recovery of 196,000 doses. 700,000 doses remained unaccounted for, however. These doses appear to have been consumed by patients.
Crown Court at Croydon
Mr Gillespie was tried in the Crown Court at Croydon, United Kingdom. The trial ran for four months. The essential issue at trial for the jury was whether Mr Gillespie’s conduct had been fraudulent – that is, whether he had known that the medicines in question were falsified.
The prosecution presented evidence to demonstrate that Mr Gillespie must have known that the medicines were falsified. This included a laboratory report he had received that showed that the medicines he had submitted for testing had either no active ingredient or much less of the active ingredient than a genuine product. The prosecution also presented evidence of a conversation between Mr Gillespie and one Mr Yadan in France who had confirmed that the medicines were not genuine.
The defendant’s case was that he had purchased the medicines from the son of a business associate and that he did not know that they were falsified. He had applied the French vignettes merely as a marketing ploy to boost sales in the UK; this had not been done to conceal the fact that the medicines were falsified. He further denied the Crown’s allegations that he had been informed that the medicines were falsified.
The prosecution made an application to adduce evidence of the defendant’s bad character. This evidence related to the circumstances in which the defendant’s previous business, Discpharm, had ceased to operate, and initially focused on the following matters:
(1) the defendant’s fraudulent conduct;
(2) the defendant’s formal admission as to his fraudulent conduct;
(3) the defendant’s previous conviction for a labelling offence contrary to the Medicines Act 1968
(4) evidence of the defendant’s obstruction of the investigation into Discpharm by his professional wiping of a computer hard drive; and
(5) the defendant’s lies on oath in bankruptcy proceedings against him.
Judge Waller acceded to the application in relation to points (1), (2) and (3) but declined the application in relation to points (4) and (5). He allowed evidence in relation to points (1), (2) and (3) to be adduced on three bases under s 101 of the Criminal Justice Act 2003. These were that that the evidence was relevant to an important matter in issue between the defendant and the prosecution (s 101(1)(d)), that it was important explanatory evidence (s 101(1)(c)) and that it was evidence to correct a false impression given to the jury (s 101(1)(f)). In relation to s 101(1)(f), the false impression in this case was the suggestion of the appellant’s counsel that his bankruptcy and the winding up of Discpharm had been a “sad and unfortunate incident” rather than the result of his own dishonest dealings with the Royal Bank of Scotland. This was considered by the prosecution to be seriously misleading.
In ruling on the application under s 101, Judge Waller indicated that he approached the matter “in a spirit of caution” in relation to the risk of prejudice to the defendant, consistent with the approaches taken in previous decisions of the Court of Appeal of England and Wales. He was, however, influenced by the fact that the defendant had himself made admissions in relation to the improper conduct in question.
In relation to s 101(1)(d), Judge Waller considered that he did not think that the defence would be hampered by the admission of the evidence; nor would its admission significantly add to the difficulty or length of the trial. Rather, it went to an important matter in issue between prosecution and defence and showed a propensity to commit an offence of the kind charged. Accordingly, he allowed the evidence to be admitted on the basis of s 101(1)(d).
In relation to s 101(1)(c), Judge Waller considered the definition of “important explanatory evidence” under s 102 of the Criminal Justice Act 2003, which provided that evidence is important explanatory evidence if:
(a) Without it, the court or jury would find it impossible or difficult properly to understand the other evidence in the case, and
(b) Its value for understanding the evidence as a whole is substantial.
Judge Waller considered that the jury would find it difficult to properly understand the other evidence of the alleged conspiracy in the instant case without knowing the circumstances of the collapse of Discpharm and that its value for understanding the case as a whole was substantial. Accordingly, the evidence was admissible under s 101(1)(c).
In relation to s 101(1)(f), Judge Waller considered the arguments of the prosecution but noted that ultimately it was not necessary to consider whether the proposed evidence went further than was necessary to correct the false impression because it was in any event admissible under s 101(1)(c) and (d).
On 8 April 2011, Mr Gillespie was convicted and sentenced in the Crown Court at Croydon of one count of conspiracy to defraud, three counts of supplying a medicinal product without marketing authorisation, three counts of selling counterfeit goods, and one count of acting as a company director when disqualified.
In sentencing Mr Gillespie, Judge Waller noted that it was very rare for falsified medicines to be introduced into the UK pharmaceutical market because of the rigorous and stringent regulatory framework. He further noted that the appellant did not co-operate with the investigation of the MHRA, that he had contested matters in a long and complicated trial, and that he had deliberately sought to deceive the public by making the drugs appear as authentic as possible. Further aggravating factors included that the medicines involved in the falsification were high value drugs for which there was a great demand to use the drugs in treating prostate cancer, heart disease and mental illness. Furthermore, while some of the medicines had been retrieved, considerable quantities were never returned. Accordingly, the clear inference was that they must have been consumed by vulnerable patients. Judge Waller noted that there was a need for a “genuine deterrent” sentence on the facts of the case. Against this, Judge Waller considered that the defendant was 65 years old at the time of sentencing.
In respect of the charge of conspiracy to defraud, Mr Gillespie was sentenced to eight years’ imprisonment. In respect of each of the charges of supplying a medicinal product without marketing authorisation, he was sentenced to 18 months’ imprisonment. In respect of each of the charges of selling counterfeit goods, he was sentenced to three years’ imprisonment. In respect of the charge of acting as a company director when disqualified, he was sentence to 12 months’ imprisonment. All of the sentences were ordered to run concurrently, resulting in a total sentence of eight years’ imprisonment. In addition, Mr Gillespie was disqualified from acting as a company director for 12 years and a forfeiture order for assets worth GBP 5.7 million including various medical products was made against him.
Court of Appeal of England and Wales (Criminal Division)
Mr Gillespie appealed against both his conviction and his sentence to the Court of Appeal of England and Wales, Criminal Division.
The appeal against conviction was based on an argument that the evidence as to the appellant’s bad character should not have been admitted and that its admission was unfair to the appellant.
In relation to the admission of the evidence under s 101(1)(d), the appellant argued that the dishonesty involved in the Discpharm case (fraudulently obtaining advanced funds) was wholly different to that which was involved in the instant case concerning the sale of falsified medical products. It was not open to the judge to reach the conclusion that there were sufficient similarities to admit the evidence. Furthermore, it was unfair to admit the evidence because Mr Gillespie had never been convicted in relation to the fraud and it was now six years after the event. He would not be able to cross-examine relevant witnesses or submit relevant documentary evidence. Accordingly, there was a real risk of prejudice. Additionally, there was a risk of unfairness of “satellite litigation” of the Discpharm fraud case.
As regards admission of the evidence under s 101(1)(c), the appellant argued that there would have been no difficulty for the jury in understanding the evidence without being told of the Discpharm fraud allegations. Finally, in relation to s 101(1)(f), the judge’s finding that there was a false impression that needed correcting was unfair and that it was a not a proper exercise of the judge’s discretion to admit the evidence on this basis.
The Court of Appeal noted that the judge in this case had properly directed himself as to the law and hence it would not interfere with the judge’s decision to admit the evidence was plainly wrong or that his discretion had been exercised unreasonably in the Wednesbury sense (that is, so unreasonable that no properly directed judge could reasonably have exercised their discretion in such a way).
In relation to the appellant’s arguments concerning s 101(1)(d), the Court of Appeal held that it was within the discretion of the trial judge to find that the character evidence submitted by the prosecution was sufficiently similar to be admitted as evidence. It was too simplistic to say that because the earlier case concerned fraudulently obtaining advanced funds and the present case involved fraudulently misrepresenting the composition and source of medicines that the two frauds were not sufficiently similar. In the judgment of the Court of Appeal, ‘in each of his pharmaceutical businesses, the appellant [had] demonstrated a willingness to enter into skilled deception’. Hence, there was sufficient similarity for the evidence to be admissible under s 101(1)(d). This being the case, there was no basis for the appellant’s argument that admission of the evidence was unfair. The evidence was specific and the prosecution’s application was tightly focused. Furthermore, the fact that the incident had not been the subject of a prosecution did not prevent it being admitted to the jury. In this case, the fact that there were clear and unambiguous admission by the appellant meant that the admission of the evidence was appropriate. Furthermore there was no risk of unfairness from the appellant not being able to cross-examine particular witnesses or submit particular documentary evidence. Accordingly, the trial judge was entitled to admit the evidence under s 101(1)(d) and was right to do so.
In relation to the arguments concerning s 101(1)(f), the Court of Appeal found that the trial judge was entitled to allow the admission of the evidence on the basis that it was necessary to correct the false impression.
Finally, in relation to s 101(1)(c), the Court of Appeal found that if this had been the only basis on which the evidence had been adduced, that it would not have been ‘important explanatory evidence’. However, once the evidence had been validly admitted under s 101(1)(d) and (f), there was no prejudice caused to the appellant as a result of it being admitted under s 101(1)(c) as well.
Accordingly, there was nothing unfair or improper in the decision of the trial judge; nor was there any prejudice to the appellant from the admission of the character evidence. Accordingly, the appellant’s appeal against conviction was dismissed.
Mr Gillespie appealed against his sentence on the basis that the sentencing judge had failed to properly take into consideration the appellant’s age and that the appellant had only been convicted of the minor offence of improper labelling and had never been to prison before. In the circumstances, it was argued that eight years was too long.
The Court of Appeal rejected the appeal against sentence had held that given the seriousness of the offences and the consequences for human health and confidence in the healthcare system, the sentencing judge was required to pass a deterrent sentence. Although the appellant was aged 65, he “may have been” fortunate not to have been prosecuted in relation to the Discpharm fraud against the Royal Bank of Scotland. Clearly, his sentence would be difficult for him and his family but given the seriousness of the offences, the sentence was not manifestly excessive. Accordingly, the appeal against sentence was dismissed.
Mr Gillespie was the driving force behind the conspiracy responsible for organising the purchase of falsified medical products, forging documents, and testing, financing, collecting, relabelling and delivering the falsified medical products. He established a network of companies worldwide to facilitate the movement of falsified medical products and to launder the proceeds of his crimes. He had actively taken steps to ensure that his name was not associated with some of these companies.
Mr Gillespie owned and operated the UK-based company Consolidated Medical Supplies as well as the Luxembourg-based company Kirchberg Handels GmBH. He was a former pharmaceutical parallel importer and licensed wholesaler. He had a previous conviction in the mid-1990s for a labelling offence against the Medicines Act 1968. In his sentencing for the offences in the instant case, the sentencing judge noted that he had always “worked on the edge of legality”.
Mr Gillespie was also the former owner and managing director of Discpharm, a company which sourced pharmaceuticals from manufacturers in France and sold them to French customers. In relation to this business, he had been arrested concerning a GBP 2 million fraud against the Royal Bank of Scotland relating to his previous business, Discpharm. Although no charges were ever brought against Mr Gillespie or anyone else in relation to this fraud, on 14 January 2009 he entered into an undertaking not to act as a company director for a period of 11 years. He also signed a document admitting that he had provided fraudulent invoices to the Royal Bank of Scotland.
There was also evidence that Mr Gillespie had sought to destroy evidence concerning the fraud perpetrated by Discpharm by having the hard disk of his laptop professionally wiped. Furthermore, e later admitted that he had perjured himself on oath in High Court in Bankruptcy when he claimed that the drive had been accidentally magnetically wiped when travelling on a train.
Mr Gillespie had also established companies in Francophone countries in West Africa. Documents were also obtained by investigators which implicated government officials in certain African nations in corrupt activities concerning Mr Gillespie’s network.
Mr XY was a French national. His father ran a pharmaceutical wholesaler in Tunisia and was an associate of Mr Gillespie. He allegedly acted as the middle man between Mr Gillespie and Mr XZ, the manufacturer of the falsified medical products. It was alleged that Mr XY established off the shelf companies with nominee directors in tax havens. He would shut down companies and bank accounts quickly once they became compromised and would open replacement companies and bank accounts in the same city. He allegedly controlled the movement of falsified medicines and supervised the movement of air freight. It was alleged that he submitted genuine medicines to Mr XZ to reverse engineer the medical products. He was also allegedly involved in smuggling falsified high value medical products used to treat cancer from China through Turkey, Switzerland, Germany, Malta and the UK.
He was arrested in Spain and extradited to France to face charges relating to the criminal operation. Further information about the criminal proceedings against him was not available at the time of writing.
Mr XZ acted as the manufacturer of the falsified medical products for Mr Gillespie. He had wide business interests, including in the mining industry, and was well travelled. He traded industrial quantities of active pharmaceutical ingredients (APIs) and attended international conferences relating to fine chemicals and APIs. He employed a small number of specialists and frequented online business-to-business forums. He had initially become involved in the sale of falsified Viagra and Cialis and then had subsequently progressed to specialist medical products.
Mr XZ met undercover US authorities in Bangkok to discuss the supply of falsified medicines, where he offered to sell falsified Zyprexa, Plavix and Casodex. He subsequently travelled to the US to supply the falsified medical products and was arrested on arrival. His laptop was seized by US authorities and sent to the UK for forensic analysis. UK authorities performing forensic analysis of the laptop found evidence relating to the falsified medical products that Mr Gillespie had imported into the UK. Mr XZ was prosecuted in the US and received a sentence of six and a half years’ imprisonment.
The conspiracy to import and supply falsified medical products in this case was the most serious case of its kind in Europe. As a result of the defendant’s enterprise, 2.1 million doses of falsified medicines entered the UK supply chain. These medicines were used to treat serious conditions such as prostate cancer, ischemic heart disease, schizophrenia, bipolar disorder and other sever mental conditions.
The seriousness of Mr Gillespie’s offending was noted both by the sentencing judge and on appeal in the Court of Appeal of England and Wales. The sentencing judge noted that it was very rare for falsified medical products to enter into the UK because of the rigorous and stringent regulatory framework designed to prevent this. His Honour also noted that the drugs involved in this case were high value drugs which were in great demand. This warranted a “genuine deterrent” sentence.
The Court of Appeal of England and Wales noted the harms of the Mr Gillespie’s offending not only in relation to human health but also in relation to public confidence in the healthcare system of the UK:
“On any view these were extremely serious offences. People had been prescribed what they believed to be genuine drugs which may assist them in full recovery when they were not. For the most part the drugs are worthless. In some cases they may be positively damaging. That may depend upon their precise make-up. In any event, the sale of counterfeit drugs undermines public confidence and causes particular grief to those who thought they were taking genuine drugs when they were not.”