Twelve years after FDA prohibited the sale of dietary supplements containing ephedrine alkaloids (ephedra), a New York man has been found guilty of violating the ban.

Following a three-day trial, a jury in Atlanta convicted Chenhsin Chan (aka Paul Chan) on 30 felony counts in connection with the online sale of dietary supplements containing ephedrine, the U.S. Department of Justice (DOJ) announced last week.

Chan of Elmhurst, New York was convicted on 10 counts of mail fraud, 10 counts of introducing adulterated food into interstate commerce, five counts of knowingly distributing a listed chemical without obtaining the required registration, and five counts of money laundering.

The 44-year-old Chan sold more than US$4.5 million in dietary supplements containing ephedrine alkaloids, but the jury forfeited assets he purchased with funds from the crimes, including a New York property that had been purchased for $950,000, a Mercedes Benz, a Lamborghini Gallardo and more than $666,000 in proceeds from the illegal activities, the DOJ noted in a press release.

Assistant U.S. Attorney Steven D. Grimberg said the jury was in deliberations for less than two hours prior to rendering its verdict.

In 2004, FDA banned the sale of supplements containing ephedrine alkaloids after concluding there was little evidence of ephedra’s effectiveness, and that the substance elevated blood pressure and placed stress on the circulatory system.

“I think the jury was convinced that his actions were willful, that he knew that these products were illegal to sell, he knew that there was a … continued demand for them from customers who had been able to legitimately purchase these products in the past at their local GNC store or wherever," Grimberg said in a phone interview Thursday. “He was able to sort of corner the market on something that was no longer legal to sell in the United States."

The government has not yet made a public recommendation for a sentence, said Grimberg, who prosecuted the case with Assistant U.S. Attorney Kelly K. Connors. Romeo Salta, a New York attorney who represented Chan at trial, said his client planned to file an appeal.

In a 2005 interview, Chan admitted to FDA investigators that his company, The Wholesale Source LLC, was distributing ephedrine alkaloid-containing supplements to customers, according to the criminal indictment filed against him. Although FDA warned Chan that his activity was unlawful, he continued to sell supplements containing the illegal substance through August 2012, the indictment alleged.

What’s more, Grimberg cited evidence that was introduced at trial showing Chan received notice in packaging that ephedra products were for export only and that they were unlawful to sell in the United States.

“To me, that is brazen," reacted food and drug lawyer Anthony Young to the government’s contention that Chan continued to sell products in spite of warnings from FDA and others.

“The message is clear: Whether a warning from the FDA is in the form of a warning letter or during a conversation with an FDA investigator, it cannot be ignored," said James Prochnow, a shareholder in Denver with the law firm Greenberg Traurig LLP, in an email to INSIDER. “The recipient of the warning must immediately discontinue the activity involved or immediately seek the advice of an experienced FDA lawyer. The FDA does not have to undertake any further compliance or enforcement action before commencing a criminal investigation."

History of Ephedra Ban

Also called Ma huang, the ephedra plant is a source of ephedrine alkaloids, including ephedrine and pseudoephedrine, which are regulated as drugs when chemically synthesized, according to FDA. At the time it adopted a regulation banning ephedra in dietary supplements, which was promoted in part to bolster energy and sports performance, FDA noted ephedra’s effects were associated with such adverse outcomes as heart attack and stroke.

Young noted it took FDA a number of years to ban ephedra in dietary supplements after the agency moved to investigate its safety. As Steven Shapiro, Of Counsel to Rivkin Radler LLP, pointed out in a recent INSIDER article on the history of ephedra, FDA took the unprecedented step of using a regulation to ban an ingredient in dietary supplements due to a finding that ephedra presented an unreasonable risk of illness or injury.

Seven years earlier in 1997, FDA released a proposal that would have required a warning that supplements containing ephedrine alkaloids are hazardous and should not be used for more than seven days. The agency also proposed limiting the amount of ephedrine alkaloids in supplements and preventing combining ephedra with other substances that have a known stimulant effect. The agency modified its proposal in 2000.

“Originally, ephedra was known to be an issue at the time DSHEA [The Dietary Supplement Health and Education Act of 1994] was passed, and industry was already addressing" its labeling and safety, observed Young, a partner in Washington with the law firm Kleinfeld, Kaplan & Becker LLP. “The industry made an effort to negotiate a level of ephedra that would be considered OK by FDA, and those negotiations essentially broke down when the diet side of the industry—as opposed to the botanical products side–… wanted a higher level than FDA was willing to accept."

Defendant Denies Illegality of Ephedra

In spite of the 2004 FDA ban, the indictment against Chan quoted his websites as denying ephedrine was illegal to sell and asserting that it had been approved by FDA “for the treatment of asthma, colds, allergies or any other disease."

Chan was indicted in 2014, nine years after FDA first warned him during an interview that he was engaging in unlawful activity.

“It is no defense to either a civil or criminal charge by the FDA that there was a long period of time before enforcement action was started," pointed out Prochnow, a former litigator with the DOJ. “This is another example of the FDA’s and DOJ’s effort to go after executives as well as the companies they own and manage."

Chan’s case is not the only one that concerned FDA’s ban. Over the years, FDA has occasionally targeted companies for selling ephedra, including a 2006 action in which the U.S. Marshals Service seized supplements labeled as containing ephedrine alkaloids. More recently in 2014, a former Deputy U.S. Marshal admitted to using an internet supplement company to sell a product (Lipodrene) that contained ephedrine. Lipodrene also was identified in the Chan indictment as a product that was delivered to customers and contained ephedrine.