Enhanced Athlete CEO Scott Cavell is under federal criminal investigation for the sale of selective androgen receptor modulators (SARMs), court documents in a civil lawsuit revealed. The filings also showed the company is fighting the court ordered deposition of its public face Anthony Hughes, also known as Dr. Tony Huge.
The criminal probe was disclosed in recent court documents in an ongoing civil lawsuit filed by Nutrition Distribution against Enhanced Athlete for the false advertising of SARMs.
In a declaration filed in the false advertising lawsuit, Ronald Peters, a criminal attorney representing Cavell in a parole violation case, said he contacted Paul Hemesath, the federal prosecutor assigned to the case.
“Mr. Hemesath informed me that Mr. Cavell is a subject of a criminal investigation involving Enhanced Athlete and its sale of supplement products including [SARMs],” Peters declared.
FDA has said SARMs are unapproved drugs that can cause life-threatening reactions.
In an emailed statement, Lauren Horwood, a spokeswoman for the U.S. Attorney’s Office for the Eastern District of California, confirmed “an investigation into [Cavell’s] manufacturing and distributing unapproved substances for human consumption based on a [Dec. 6, 2017] search of his business and residence.” She said she could neither confirm nor deny a criminal investigation against Enhanced Athlete or Hughes.
It’s been a challenging few months for Cavell and Enhanced Athlete.
First, Enhanced Athlete’s facilities were raided by FDA. Then, its CEO was arrested for allegedly violating his probation tied to an unrelated criminal case. Meanwhile, the competitor lawsuit for false advertising of SARMs continues to highlight the complexities of the management and operations of Enhanced Athlete.
On Mar. 29, Nutrition Distribution and Enhanced Athlete filed a joint statement of disagreement over whether discovery in the lawsuit should be stayed.
Enhanced Athlete’s lawyer, Michael Adams, argued discovery should be delayed for four months pending the outcome of the parallel federal criminal investigation. The two parties were unable to come to an agreement on discovery after a series of telephone and email exchanges in mid-March.
Nutrition Distribution's civil action "arises from the same nexus of facts that triggered a parallel criminal investigation into Mr. Cavell and Enhanced Athlete," Adams wrote in the joint statement. "During the course of that investigation, Mr. Cavell’s criminal defense counsel has learned that both Enhanced Athlete and Mr. Cavell are 'targets' in an open criminal investigation pending in the Eastern District. Mr. Cavell should not be forced to choose between defending himself in this action and preserving his Fifth Amendment rights."
Adams argued discovery should be stayed against Enhanced Athlete and all its officers, directors, managing agents and any designated corporate representatives.
If granted, a four-month stay would likely affect a court order tied to Hughes, whose role in Enhanced Athlete has been the subject of debate.
On Feb. 14, U.S. District Court Judge Kendall J. Newman ordered Enhanced Athlete to produce Hughes for a deposition within 60 days.
Nutrition Distribution and its attorney Robert Tauler, of Tauler Smith LLP, have argued Hughes founded and runs Enhanced Athlete, along with Cavell.
Enhanced Athlete and Cavell have countered Hughes is merely an unpaid brand ambassador who “travels the world and leaves no stone unturned in order to discover what chemicals and products exist that can assist our fans and researchers,” according to court filings.
Hughes’ social media accounts suggest he is currently abroad, primarily Thailand, where he has been living for several months.
Cavell is in jail in Sacramento following his arrest for parole violations tied to his 2014 criminal conviction for mortgage fraud. Cavell is seeking a resolution with probation officials, court records show, and a status conference is scheduled for April 3 before a federal district court judge.
Federal SARMs investigation
In early December 2017, federal authorities executed a search warrant at the Sacramento-area facilities of Enhanced Athlete, looking for the SARM ostarine, as well as 2,4-Dinitrophenol (DNP) and other research chemicals. The feds seized publicly unidentified raw materials as well as both finished and unfinished products.
“Based on intelligence gathered, Cavell was believed to have been manufacturing and distributing unapproved drugs, dietary supplements and controlled substances/steroids for human consumption,” Miranda Lutke, a U.S. probation officer, declared in a Feb. 6 statement under penalty of perjury.
The probation officer suggested Cavell is suspected of continuing to engage in the above activities, but he’s purportedly operating Enhanced Athlete out of his home, because the City of Sacramento closed his supplement business following the FDA raid.
In the joint statement filed in the civil matter, Enhanced Athlete claimed it only recently became aware Cavell and Enhanced Athlete were under federal criminal investigation for the sale of SARMs and, thus, requested a stay of four months pending the resolution of the federal investigation.
“Both the instant action and the ongoing criminal investigation arise from the same nexus of facts and share same allegations about the alleged sale of SARMs,” Adams, the lawyer representing Cavell and Enhanced Athlete, wrote. “Accordingly, discovery propounded on Mr. Cavell and Enhanced Athlete in this action, including a deposition of Enhanced Athlete’s corporate representative, Anthony Hughes … would implicate the Fifth Amendment rights of Mr. Cavell and Enhanced Athlete’s officers, directors, corporate representatives, and managing agents.”
However, Nutrition Distribution and Tauler countered that Enhanced Athlete only asked for a stay as the clock almost ran out on a court order requiring the company produce Hughes for a deposition. Further, Tauler argued Cavell and Enhanced Athlete knew they were being investigated by federal authorities based on the company’s public notification of the December 2017 raid.
“Cavell was aware of the criminal investigation against him for the sale of SARMs in December 6, 2017, when the government raided the Enhanced Athlete premises,” Tauler said, in the joint statement. “In a press release issued only days afterwards, Mr. Cavell admitted that the government confiscated SARMs from Enhanced Athlete’s facility as part of the raid.”
In the statement posted to the Enhanced Athlete website, the company said, “We believe this to be the first time that the FDA’s criminal investigation unit has executed a search warrant related to SARMs.”
The statement added, “We always knew that the FDA would one day pay a visit to our offices.”
The company also said it intended to continue operations as usual until told to stop by the “proper authorities,” although Enhanced Athlete admitted its legal counsel advised the company to reconsider its decision.
In the current discovery disagreement, Tauler argued Enhanced Athlete’s posted statement is riddled with incriminating admissions, showing uninterrupted discovery in the false advertising lawsuit would not further incriminate Cavell.
Further, Tauler argued a February 2018 court declaration (under penalty of perjury) from Cavell in the false advertising case includes Cavell’s admission that he has knowledge of all products made and sold by Enhanced Athlete, which includes SARMs.
“This is all the government would possibly need to prosecute Mr. Cavell criminally, assuming they are prosecuting him for his sale of SARMs,” Tauler stated, in the joint statement.
Hughes’ role in Enhanced Athlete: A cat and mouse game?
Whether Hughes is the founder and secret boss of Enhanced Athlete or merely an unpaid ambassador of its goods remains a central question in the false advertising lawsuit.
Early media coverage—including interviews with Hughes—indicated Hughes founded and runs Enhanced Athlete. This is why Nutrition Distribution has included Hughes in its lawsuit against Enhanced Athlete. However, Cavell has repeatedly claimed Hughes is not a paid employee, but rather an unpaid ambassador who receives some travel reimbursement.
“As the court is aware, defendants have previously taken the position that Mr. Hughes had absolutely nothing to do with the company,” Tauler stated, in the joint statement. “However, since the time the court has ordered Mr. Hughes to be produced for deposition, Mr. Hughes has himself made comments misrepresenting the court’s order, ostentatiously offering to be deposed, and personally attacking plaintiff’s counsel by engaging in a YouTube interview published on February 21, 2018.”
According to Tauler, Hughes said in the video that the plaintiffs could go to Thailand and depose him anytime or depose him via Skype. However, the joint statement noted Tauler offered to meet Hughes in Hong Kong, and Enhanced Athlete requested the discovery stay four days later.
Enhanced Athlete claimed 5th Amendment protection can be extended to a corporation’s directors, officers, corporate representatives and managing agents, including Cavell and Hughes.
Tauler has argued an investigation against Cavell should not impact a court ordered deposition of Hughes, as “one can only take the Fifth Amendment of behalf of themselves,” and Hughes has not offered a declaration in the case.