Money, drugs at core of Atlanta businessman’s fraud trial
He made millions while defrauding customers and snubbing regulations, and now it’s judgment time for the owner of an Atlanta-area dietary supplement business, federal prosecutors told jurors as a long-awaited trial kicked off Wednesday.
Jared Wheat and his company, Hi-Tech Pharmaceuticals, are accused of falsifying documents to show compliance with FDA manufacturing standards and of selling a dietary supplement containing a prescription medication without disclosing it on the label. Wheat and the company pleaded not guilty to 11 federal charges of wire fraud, money laundering and selling misbranded drugs.
“Mr. Wheat and Hi-Tech kept up this charade for years,” federal prosecutor Kelly Connors told the jury.
But Art Leach, one of eight defense attorneys in the case, said there was no fraud, only reasonable attempts by Wheat and Hi-Tech to comply with changing rules for the dietary supplement industry. He said the case is “regulation by prosecution.”
“This is a paperwork case,” Leach told the jurors. “It’s not a case about people being hurt. Every customer got the benefit of the bargain.”
The trial in Atlanta, expected to last a month, has been brewing since Wheat and Hi-Tech were indicted in 2017. It was postponed several times while the parties argued over evidence. Wheat faces prison if found guilty.
It’s not the first time Wheat and his company have been in trouble with the federal government.
In 2008, Wheat and Hi-Tech pleaded guilty to fraud charges accusing them of manufacturing millions of dollars worth of products at an unsanitary facility in rural Belize that prosecutors described as “essentially a four-room home.” The unlicensed supplements were not approved by the FDA, but were sold throughout the United States via the internet as generic versions of prescription medications, prosecutors said.
Wheat was sentenced in February 2009 to around four years in prison and three years of supervision. He was fined $50,000 and ordered to forfeit $3 million, several vehicles — including a Ferrari and a Maserati — and all equipment and supplies connected with the Belize facility.
In 2017, Wheat and Hi-Tech were ordered to pay $40 million in the Federal Trade Commission’s long-running lawsuit challenging their advertising. Their attempts to scuttle the judgment have been unsuccessful.
In 2019, the FDA warned Wheat and Hi-Tech to stop selling products with an unsafe stimulant known as DMHA.
The current charges relate to activity between 2011 and 2014.
Connors said Wheat and Hi-Tech doctored certificates and audit reports to convince customers, including other dietary supplement providers, that their manufacturing facilities in Norcross and Suwanee complied with the FDA’s 2010 standards. She said they used the names of an attorney in Belize and a company Wheat set up in place of legitimate auditors.
Some of Hi-Tech’s contract manufacturing customers unwittingly submitted forged documents to international regulatory authorities, Connors said.
She said Wheat and Hi-Tech also sold a supplement called Choledrene that secretly contained lovastatin, the active ingredient in prescription medication for high blood cholesterol. The product was marketed as using red yeast rice to support healthy cholesterol, Connors said.
But Leach said Choledrene, sold between 2009 and 2014, contained molecules identical to lovastatin that could not be distinguished from the drug until a new test was developed in 2017.
Leach said Wheat started Hi-Tech 30 years ago in his parents’ basement and grew it into one of the most successful dietary supplement companies in America, with products sold by leading retailers, including Walmart and Amazon.
“Hi-Tech, even after being indicted, is going strong,” he said in opening statements.
Wheat, on a $100,000 bond since 2017, had several supporters in court Wednesday, including some in Hi-Tech-branded clothing. He could be made to forfeit about $3 million in seized bank funds if found guilty.
About the Author
Journalist Rosie Manins is a legal affairs reporter for The Atlanta Journal-Constitution.
