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June 28, 2017
Editorial credit for 5-hour Energy photo: Shutterstock.com
It began as a legitimate venture to distribute 5-hour Energy south of the U.S. border.
But when a husband and wife were unable to sell the liquid dietary supplement in Mexico, they turned to crime, federal prosecutors said, in an elaborate scheme that ultimately involved distribution of millions of bottles of counterfeit 5-hour Energy.
Now, the couple faces the consequences of the years-long scheme. On June 20, U.S. District Judge Lucy Koh sentenced Joseph and Adriana Shayota to 86 months and 26 months in prison, respectively.
Several other defendants charged in the counterfeiting scheme also have been sentenced to hard time, the U.S. Department of Justice (DOJ) noted, while others received probation. A number of the defendants also were ordered to pay restitution to Living Essentials, 5-hour Energy's parent company.
On Nov. 28, 2016, a San Jose jury found Joseph and Adriana Shayota guilty of conspiracy to traffic in counterfeit goods, as well as conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce, according to a recent DOJ news release.
Attorneys for the couple did not immediately respond to requests for comment.
“Acting out of pure greed, these defendants gambled with the health and safety of millions of users of this well-known consumer product," U.S. Attorney Brian Stretch said in a statement. "Consumers can rightly expect that the commercial products they buy are safe to ingest. Those individuals who manufacture and distribute unsafe counterfeit food products will be prosecuted and sent to jail."
The venture began innocently enough.
Through their company, which conducted business as Baja Exporting LLC, the Shayotas entered an agreement with Living Essentials to distribute 5-hour Energy in Mexico. Although Living Essentials produced and provided to the couple 5-hour Energy bottles with Spanish labels, the Shayotas were unable to sell the product in Mexico.
That’s when the scheme purportedly commenced. The government said the Shayotas and their co-conspirators removed the Spanish-language labels, replacing them with fraudulent labels in English. The conspirators also removed the actual lot numbers and expiration dates on the bottles and replaced them with false information, the Department of Justice said.
The bottles of 5-hour Energy with counterfeit labels were sold throughout the United States, but the criminal enterprise didn’t end there. The evidence at trial showed that by early 2012, the Shayotas and their co-conspirators began to produce and sell an entirely fake 5-hour Energy, according to the government.
“They manufactured the counterfeit 5-hour energy liquid at an unsanitary facility using untrained day workers," DOJ said, “and mixed unregulated ingredients in vats in an attempt to mimic the real 5-hour Energy products."
According to DOJ, the Shayotas and their co-conspirators also retained a plastics manufacturer in Mexico to copy the 5-hour Energy bottles and caps, recruited co-conspirators in the San Diego area to produce counterfeit display boxes and bottle labels, and placed lot numbers and expiration dates on the counterfeit products after they copied the information from legitimate bottles of 5-hour Energy.
“We are pleased that the authorities took swift action and that justice was served," a spokeswoman for 5-hour Energy said in an emailed statement.
The prosecution stemmed from an investigation by the FBI and FDA’s Office of Criminal Investigations.
Associate editorial director, Natural Products Insider, Informa Markets Health and Nutrition
Josh Long directs the online news, feature and op-ed coverage at Natural Products Insider, which targets the health and wellness industry. He has been reporting on developments in the dietary supplement industry for over a decade, with a focus on regulatory issues, including at the Food and Drug Administration.
Josh majored in journalism and graduated from Arizona State University the same year "Jake the Snake" Plummer led the Sun Devils to the Rose Bowl against the Ohio State Buckeyes. He also holds a J.D. from the University of Wyoming College of Law, was admitted in 2008 to practice law in the state of Colorado and spent a year clerking for a state district court judge.
Over more than a quarter century, he’s written on various topics for newspapers and business-to-business publications – from the Yavapai in Arizona and a controversial plan for a nuclear-waste incinerator in Idaho to nuanced issues, including FDA enforcement of the Dietary Supplement Health and Education Act of 1994 (DSHEA).
Since the late 1990s, his articles have been published in a variety of media, including but not limited to, the Cape Cod Times (in Massachusetts), Sedona Red Rock News (in Arizona), Denver Post (in Colorado), Casper Star-Tribune (in Wyoming), now-defunct Jackson Hole Guide (in Wyoming), Colorado Lawyer (published by the Colorado Bar Association) and Nutrition Business Journal.
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