An Oregon businessman who operates a dietary supplement firm Maxam Nutraceutics is demanding a new trial after a jury found in November that Uncle Sam is entitled to keep $700,000 in assets traceable to fraud.
Lawyers representing James Cole said testimony from an FDA official unfairly prejudiced his client and should have been excluded, while a separate piece of evidence should have been admitted.
Prosecutors painted Cole as an unscrupulous businessman who relied on a felon to make his spray bottle supplements and made unsubstantiated claims that his products could improve such conditions as autism and Alzheimer's.
Tim Brueggemeyer, an FDA employee who supervised FDA's Forensic Chemical Center in Cincinnati, testified at trial that Cole's products could have contained analogue drugs that simulate Ecstacy and other drugs, even though Maxam's products tested negative for such substances, according to the Dec. 30 motion requesting a new trial.
It wasn't known Brueggemeyer was going to testify until after the trial began, and his statement contradicted previous statements from the government during the discovery leading up to the trial, Cole's lawyers John Markham and Michael Cox wrote. Cole was deprived of the opportunity to rebut Brueggemeyer's assertions with contrary evidence, according to the motion.
"We would like to try this case when it's a fair fight," Markham told Natural Products Insider. If the government is going to testify that drugs could have been present in spite of FDA tests, "we would call any number of experts who would clearly show that the FDA tests were correct, and there were no drugs in those products, none."
Brueggemeyer was deposed before he testified, but he did not have a report with him before or during his deposition, Cole's lawyers said. Brueggemeyer was allowed to testify in spite of objections to exclude his testimony based on the argument that he was an expert, and Cole had not received proper notice of his qualifications, according to the motion.
At trial, federal prosecutors noted Cole's relationship with Dan George, a felon who made dietary supplements for Maxam and had a drug conviction.
"The plain inferenceexplicitly assertedwas that George was continuing to manufacture drugs, doing so with Maxam's products," Cole's lawyers wrote.
The attorneys argued the court should have allowed them to reference a partial transcript of an undercover conversation between George and DEA agents. During those conversations, DEA agents sought to entice George with millions of dollars to make Ecstacy, "Roofies" and other illegal substances, but he refused to do so, according to the motion.
"This was highly relevant evidence to show that Jim Cole had a good faith basis for his belief that George was now on the straight and narrow, and was not putting illegal substances into his products," Cole's lawyers argued.
Gerri Badden, a spokesperson for the U.S. Attorney's Office in Oregon, did not respond to a request for comment on the request for a new trial. Markham said the government asked for more time to respond to the motion.
In a press release issued after the jury verdict, prosecutors characterized George as "a twice-convicted federal felon and self-taught chemist in the Boston area operating in unknown labs under unknown conditions."
The civil forfeiture verdict dealt a heavy blow to Cole because he faces two other government actions, a criminal indictment in a case that is scheduled to be tried in June 2014 and a separate civil action in which the FDA is seeking a permanent injunction his Cole and his supplement business for violating cGMPs (current good manufacturing practices) and making unlawful claims that the products treat such diseases as autism, Alzheimer's and cancer.
In the FDA proceeding alleging unlawful claims based on customers' testimonials, Cole's lawyers raised the First Amendment as an affirmative defense. Such testimonials should be permitted if they are accompanied by a disclaimer that FDA has not approved the statements, according to Cole's answer to the complaint.
Cole's lawyers also cited the absence of a health threat, noting FDA's failure to associate any injuries or illnesses with Maxam's products.
Marc Ullman, a dietary supplement lawyer who is not involved in the case, told Natural Products Insider at SupplySide West in Las Vegas that such a statement is "completely irrelevant" to FDA's cGMPs.
"The GMPs exist to ensure uniformity in manufacturing practices. They exist to ensure that consumers are getting what they are supposed to be getting, that the manufacturer has a facility that's under control that is producing products that are consistent for quality, strength and purity," Ullman said, commenting on FDA's enforcement action, "and it doesn't necessarily relate to safety."
According to prosecutors, evidence during the six-day civil forfeiture trial against Cole revealed his two businessesMaxam Nutraceutics and TurboSonic USA, which sold electronic vibration machines for exercisegrossed nearly $21 million between 2005 and mid-2011.
The assets the government seized include three bank accounts held by Cole's businesses, his interest in a California condominium, and about 320 ounces of gold found in his home safe.