Dirty Money Requires Some Laundering!
My dear readers, let the good doctor begin this week’s guidance with one of his favorite quotes: “You cannot make this stuff up!” During the previous couple months, Dr. D has noticed that the FDA warning letter page has been relatively boring when it comes to medical device manufacturers and associated violations of the ACT (Food, Drug, and Cosmetic Act). However, it appears that criminal activity is on the upswing. For this week’s guidance, the doctor is going to entertain the readers with a tale of medical device theft and the laundering of money. In the eyes of Dr. D, money laundering is what happens when one leaves some loose change or a few dollars in one’s pants pocket and then throws the clothes into the wash. The coins come out shiny and, barring any counterfeit issues, the bills survive their ride in the washer and dryer to be eventually spent. Unfortunately, the convicted felon mentioned in this week’s guidance took money laundering to a whole new level. This individual’s flippant (look-it-up) attitude toward the law is about to cost her dearly. In fact, the United States Department of Justice (DOJ), the FDA’s Office of Criminal Investigations, the Eleventh Circuit Court of Appeals (twice), and even the United States Supreme Court were involved in this case, so clearly someone made a lasting impression, although the doctor is quite sure the impression was a bad one. Enjoy!
Department of Justice Press Release – September 9, 2016 (Excerpts)
“A medical device saleswoman was convicted yesterday on charges of conspiring to transport stolen medical devices in interstate commerce, money laundering and other charges.
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, and Robert J. West, Special Agent in Charge, United States Food and Drug Administration (FDA), Office of Criminal Investigations, Miami Field Office, made the announcement.
Kerri L. Kaley, 50, of Cold Spring Harbor, New York, was convicted by a jury in Miami on seven felony counts in a criminal case arising out of a Miami-based FDA investigation. Operation Miami Device has led to convictions in over twenty cases of medical device theft and has resulted in forfeitures, fines, and restitution totaling more than $5 million.”
Please Note: you can follow the link at the end of this week’s guidance to visit the full DOJ press release.
Case Summary
As mentioned in the DOJ excerpt, the FDA named the investigation “Miami Device” not to be confused with “Miami Vice,” but hey, maybe Tubbs might have been available to help with the investigation. Seriously, Ms. Kerri L. Kaley (Cold Spring Harbor, NY) was an active participant involved with the theft of minimally invasive medical devices, the transportation of these stolen devices across state lines, and the laundering of money made from the sale of these stolen devices. The doctor wonders if she was selling misbranded contact lens and silicone butt injection devices (if you haven’t already done so, you can read Dr. D’s previously published guidance on the lens and butt injections). According to court records, Kaley was able to launder more than $2 million dollars (people, that is a whole lot of cash to wash). The money was funneled through sham construction companies (two to be exact) with the money used to pay Kaley’s coconspirators (a.k.a. future cellmates), her mortgage, home renovations and childcare. The doctor is going to climb out on that proverbial limb and surmise that Kaley’s childcare expenses are about to get really, really, expensive. Can you say, “Through the roof of that newly renovated home?” In fact, with Kaley facing upwards of around 85-years in prison (five years for conspiracy, 50 years for transporting stolen property, 20 years for money laundering, and 1 -years for a 2014 conviction), childcare is going to be quite expensive. Unfortunately, it is easy come and easy go when it comes to her money. The Feds will be taking it all away, and some, with potential fines in excess of $2 million dollars. The good news is that Haley has already paid the United States $500,000. The bad news is that the Feds want more, more, more!
Compliance for Dummies
There really isn’t a compliance lesson to be learned from this week’s guidance, just a moral one. Stealing medical devices and transporting them across state lines, to make a quick buck, is always going to end badly. Laundering money, except for the washing of pocket change in your own laundry, is only going to exacerbate the previous crimes when the DOJ comes calling with a criminal indictment. The doctor does have one question, however: Who or what organizations were on the receiving end of these stolen devices? Dr. D thinks that a sales rep selling stolen devices and asking that payments be made to someone other than her employer would be a big red flag. If payments were made to a sham construction company, the red flag is not only big, it is on fire. The doctor guesses that over the coming months, this story will expand and we will have an opportunity to read about other convicted co-conspirators.
Takeaways
For this week’s guidance, there is just one takeaway: If one does not look good in an orange jumpsuit and shiny stainless-steel bracelets, always do the right thing. Now Dr. D is not overly religious, however, “Thou shall not steal” is one of the better known Ten Commandments. In all cultures and religious beliefs, stealing is bad and the thieves are punished. In some cultures the punishment is brutal. Can you say, I am learning to write left handed in Arabic? In closing, thank you again for joining Dr. D, and I hope you found value in the guidance provided. Until the next installment of DG, cheers from Dr. D., and best wishes for continued professional success.
References
- Code of Federal Regulation. (April 2015). Title 21 Part 820: Quality system regulation. Washington, D.C.: U.S. Government Printing Office.
- Devine, C. (2011). Devine guidance for complying with the FDA’s quality system regulation – 21 CFR, Part 820. Charleston, SC: Amazon.
- Devine, C. (2013). Devine guidance for managing key attributes of a FDA-compliant quality management system – 21 CFR, Part 820 Compliance. Charleston, SC: Amazon.
- FDA. (September 2016). Inspections, Compliance, Enforcement, and Criminal Investigations. “Medical device saleswoman convicted on charges
of conspiring to transport stolen medical devices in interstate commerce, money laundering and other charges”. Accessed September 25, 2016,. Retrieved from http://www.fda.gov/ICECI/CriminalInvestigations/ucm520905.htm
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