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On January 4, 2000, FDA's Office of Criminal Investigations (OCI) Special Prosecutions Staff received information that a firm called Para Tech Industries (Para Tech), located in Dayton, Ohio, was shipping unapproved medical devices into interstate commerce. Para Tech was shipping these devices to various chiropractic clinics in the New York regional area. The information was uncovered in a health fraud investigation conducted by the Federal Bureau of Investigation (FBI). The device in question was the CTD Mark I promoted for use in the treatment of Carpal Tunnel Syndrome without FDA approval.
In January of 2002, OCI conducted numerous interviews in Dayton, Ohio, of witnesses in this investigation. The witnesses were primarily former employees of Para Tech. The subjects of the investigation were Paul F. Fulk, President of Para Tech and Earnie S. Philbot, Vice President of Para Tech. Fulk was also the President and Chief Executive Officer of Therasys, Inc. Philbot was the Vice President, Secretary, and Treasurer of Therasys, Inc. The company, Therasys, Inc., is a related company incorporated in the State of Florida. Para Tech was incorporated in the State of Ohio.
Based on information developed through interviews of former Para Tech employees, Fulk and Philbot were indicted on February 16, 2000, by a Grand Jury in White Plains, New York. Both individuals and both entities were indicted on the following charges:
* Count 1: Conspiracy to Defraud the FDA [18 U.S.C. §
* Count 2 through 18: Shipments of Adulterated Devices into Interstate Commerce,
[21 U.S.C. §§ 331(a), 333 and 352, 18 U.S.C. § 2].
* Counts 19 through 35: Mail Fraud (Shipping Adulterated Medical Devices through the U.S. Mail and or other Commercial Carrier) [18 U.S.C. §§ 1341 and 2].
On February 23, 2000, Fulk and Philbot surrendered to U.S. Marshals in White Plains, New York. They appeared before U.S. Magistrate Judge George Yanthis in the Southern District of New York and pled "Not Guilty" to all of the above mentioned charges. Fulk also pled "Not Guilty" on behalf of Para Tech and Therasys, Inc.
On April 12, 2000, attorneys for Fulk, Philbot, Para Tech Industries and Therasys, Inc., met with prosecutors and agents at the United States Attorney's Office in White Plains, New York. During the meeting, the prosecutor presented the defense attorneys with all of the evidence developed against their respective clients.
Subsequently, on June 29, 2000, Fulk and Philbot signed plea agreements. Fulk was convicted of 18 U.S.C. §§ 371 and 1505, Conspiring to Obstruct the Proceedings of the FDA. Fulk admitted to being the leader and organizer in the aforementioned criminal activity. Philbot was convicted of the same charges as Fulk, but he did not admit to being the leader or organizer. The FDA proceedings that the defendants obstructed were FDA inspections conducted by the FDA's Cincinnati District Office in December of 1994 and December of 1995. During those inspections, Fulk and Philbot provided false and misleading information during those inspections.
On March 3, 2002, Chief Justice Walter Herbert Rice of the Southern District of Ohio in Dayton, Ohio, sentenced Fulk, Philbot, Para Tech, and Therasys, Inc., to the following:
* Fulk was sentenced to 12 months incarceration with work
release and 3 years supervised probation.
* Philbot was sentenced to 3 years probation and 6 months home confinement (1st 3 months to be electronically monitored).
* Para Tech and Therasys, Inc., were each ordered to pay a total of $211,102.30 in restitution to 24 chiropractors who bought the CTD-Mark I devices believing that it was an FDA approved device.
On December 21, 2000, Para Tech Industries, Inc., and Therasys, Inc., pled guilty in Dayton, Ohio, to one felony count of conspiring to defraud the FDA of its authority to regulate the distribution of medical devices. The case concerned the companies' distribution of an unapproved medical device called the CTD-Mark I, which the companies marketed as effective for treating carpal tunnel syndrome. At the plea hearing, the companies admitted that from at least December 1994, the owners and officers of Para Tech and Therasys knew that the CTD-Mark I had not received clearance from the FDA, and was not approved to be sold as a treatment device for carpel tunnel syndrome. The companies further admitted that for more than four years the companies' owners and officers agreed among themselves to deceive the FDA by making false statements about Para Tech's continued manufacture, sale, and shipment of the device in interstate commerce.
At the same time, Paul F. Fulk, D.C., the chief executive officer of both companies, and Earnie S. Philpot, an officer and director of both companies, pled guilty to a felony count charging them with conspiring to obstruct a pending FDA inspection. At the guilty plea hearing, Fulk and Philpot admitted that during an FDA inspection in December 1995 they attempted to conceal from the FDA investigators the fact that both companies were marketing and selling CTD-Mark I devices in interstate commerce without FDA approval. The total sales of the device to chiropractors between February 1995 through Agust 28, 1999 were about $1.6 million.
In February 2001, a mailing was sent to all chiropractors and other practitioners who may have purchased, leased, or had refurbished a CTD-Mark I, advising them that they may be entitled to restitution if they had aquired the device before August 12, 1999, for the purpose of treating patients with carpal tunnel syndrome and were unaware that it lacked FDA approval for that purpose. Some chiropractic Web sites have falsely claimed that the device was an effective alternative to surgery.
In March 2002, Fulk was sentenced to a year in prison and ordered to pay a $3,000 fine; Philpot was sentenced to three years probation and a $2,000 fine; and Para Tech and Therasys were ordered to pay restitution totaling $211,102.30 to 24 chiropractors who said they had purchased the device with the belief that it was FDA-approved for treating carpal tunner syndrome.