Diet supplement maker wages war of nutrition

Mike Brunker Projects Team editor • Profile • E-mail

NORCROSS, Ga. - Jared Wheat summons the high dudgeon of a wronged man as he lists his grievances against federal prosecutors. They have distorted the truth, smeared his reputation and harmed his thriving dietary supplement business, he says, in an effort to send him to prison for allegedly manufacturing generic prescription drugs and selling them over the Internet.

“I’ve just gotten the rough end of the stick all around,” Wheat told msnbc.com, sitting at the head of a conference table piled with pill bottles in the headquarters of Hi-Tech Pharmaceuticals, the supplement company he founded in 1994.  “… If you have a fight, you want a fair fight. You don’t want all this other stuff … trying to disprove negatives and fight things that simply are not true.”

Wheat, 36, has a powerful incentive to protest his innocence. He is facing at least 20 years in prison and the forfeiture of his business if he is convicted of the most serious charges against him. Among other things, the prosecution has accused Wheat of engaging in a “continuing criminal enterprise” — a racketeering statute typically used to prosecute organized crime syndicates.

But this is no one-sided fight. Wheat, who runs what he says was once a $30 million-a-year business selling herbal products to major retailers around the nation, is funneling big bucks into the battle.

He said he already has spent close to $3 million in legal fees to challenge almost every aspect of the government’s case. At the same time, Hi-Tech is waging a long-running court battle against the Federal Trade Commission over allegedly deceptive marketing materials, suing the Food and Drug Administration over the agency’s ban on the use of ephedra in diet supplements and contesting a raft of lawsuits, many of which Hi-Tech has filed against competitors. All told, Wheat said, he has about 20 lawyers working on various cases.

‘We'll stand our ground’
“We’re an aggressive company, but we don’t break the law,” he said. “… Basically we’ll stand our ground if we feel we’re right, versus a lot of companies (that) will say they don’t want to litigate against the federal government.”

The case is being closely watched by other players in the supplement industry, who see it and another recent high-profile case — the Feb. 22 conviction of top officials of the company behind the “Smilin’ Bob” ads and the sexual enhancement product Enzyte on fraud and money laundering charges — as evidence that the government is moving to rein in what it sees as the worst actors in the rough-and-tumble trade.  

It also has disquieting overtones for the millions of Americans who consume herbal supplements, professionally made and packaged products purchased from major U.S. retailers that may not be as safe as the sellers would have them believe.

A 45-count indictment unsealed on Sept. 7, 2006, alleged that Wheat, Hi-Tech and other company officials and associates conspired to manufacture “generic” prescription drugs and other controlled substances, including anabolic steroids, in Belize and illegally import them into the United States. It further alleged that they marketed the products as generic prescription drugs from Canada directly to U.S. citizens through various Web sites, and also engaged in mail fraud and wire fraud.

The “continuing criminal enterprise” charge against Wheat was based on an allegation that he organized and participated in an earlier scheme to distribute GHB, a central-nervous system depressant that gained notoriety in the 1990s as a “date rape” drug, and gamma butyrolactone, or GBL, a chemical used in many industrial cleaning solvents and paint thinners.

Erik S. Lesser / for msnbc.com Hi-Tech Pharmaceuticals workers on the bottling line at the company's headquarters in Norcross, Ga.

The indictment did not directly reference Hi-Tech’s successful line of dietary supplements, which it manufactures at its headquarters in Norcross, Ga., and distributes to many major retailers as well as more than 80,000 convenience stores. But subsequent court documents filed by the prosecution quoted unidentified “cooperating sources” as stating that Wheat and Hi-Tech had spiked the company’s diet products with ephedrine alkaloids, even after an FDA ban on the use of the ingredient in dietary supplements was reinstated by a federal appeals court in August 2006. The FDA banned the substance — the active agent in the ephedra plant — in 2004 after finding it presented “an unreasonable risk of illness or injury.”

Wheat, who is scheduled to stand trial this summer, has pleaded not guilty to all charges.

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