Washington • When regulators or dietary supplement executives talk about rogue companies lacing their health aides with drugs, they often describe shadowy figures creating fly-by-night operations or overseas criminals hawking spiked pills through a cheap website.
They don't tend to describe Kelly Harvey, a 20-year industry veteran who ran NovaCare, a well-known manufacturer in Murray that belongs to Natural Products Association, the nation's biggest dietary supplement trade group.
But late in September , a federal judge unsealed a 31-count felony indictment accusing Harvey of making millions of dollars from sexual enhancement pills tainted with a chemical very similar to the active ingredient in Viagra.
"It is a Utah company and that makes me cringe," said Loren Israelsen, who heads the Utah-based United Natural Products Alliance and has been outspoken in his desire to have more federal prosecutions of rogue supplement makers. "Usually they do operate on the margins and in the shadows."
To be as high profile as Harvey, he said, "is unusual."
Test case? • Harvey is the first person from the state to face prison time for allegedly spiking his products. Federal prosecutors rarely take on a case involving supplements; most of the time manufacturers or distributors pay a civil fine for violating federal laws.
In a separate felony case also unsealed last month, Harvey is accused of illegally importing ephedrine, a substance banned for use in dietary supplements.
Harvey's case appears to be one of the first filed under the Food and Drug Administration's campaign against bodybuilding, weight loss or sexual enhancement supplements spiked with drugs or steroids.
He's accused of conspiracy, money laundering and wire and mail fraud involving the production of "Stiff Nights," "Natural WOW!" and nine other variations of the same supplement. The indictment alleges the products included a derivative of Viagra.
The U.S. Attorney's Office argues that Harvey knowingly imported vast quantities of a spiked compound from China that he turned into more than one million capsules a month. NovaCare allegedly sold the pills to distributors, making made more than $2 million on the products from August 2007 to June 2010.
Harvey's attorney Jamie Zenger, who works for the federal public defenders office, said her client has cooperated with the FDA investigation "despite his belief that it was handled unprofessionally and contrary to the FDA's own investigatory regulations.
"We will be mounting a vigorous defense and look forward to responding to the charges in the indictment," she said.
Former U.S. Attorney Brett Tolman is representing NovaCare and he noted that the indictment doesn't name the company or anyone else who worked there. He said Harvey acted alone.
"It is too bad it shadows and taints a company that has been doing a lot of good," said Tolman. "The company is looking forward to moving on and trying to identify ways it can reestablish its reputation in this industry."
Harvey remained in control of the company until the grand jury indicted him in April. At that time, NovaCare's board of directors placed him on administrative leave. They formally removed him as CEO after the court unsealed the case on Sept. 21, making the indictment public. Harvey remains a part-owner of the company.
"We are reviewing what our options are and what, if any, actions may be appropriate for the company to take against Mr. Harvey for the position he has placed the company in," Tolman said.
NovaCare has reached an agreement with federal prosecutors to forfeit more than $268,000 in the ephedrine case, where Harvey and two co-conspirators are charged with importing the product into the United States repeatedly since 2007. In that case, Harvey faces charges of importing a controlled substance, conspiracy and money laundering.
The company is now on the hook for the more than $3 million federal prosecutors are seeking in the case involving the spiked sexual enhancement pills. That indictment focuses solely on Harvey, his home, his cars and his bank accounts.
Public health • Insiders such as Israelsen and industry attorney Marc Ullman hope the criminal case against Harvey will act as a deterrent.
"If you are selling these products, at this point, at this late date, you are on notice that you need to make sure that your products are not adulterated," said Ullman, who represents supplement companies. "It is a public health issue."
He called the FDA's investigation "absolutely appropriate" and he hopes to see more, though he knows such cases are time consuming. Instead of going for big felony indictments, Ullman said the agency should file misdemeanor charges that take fewer resources than the agency expended on Harvey.
The FDA issued its first public warning about "Stiff Nights" on Nov. 5, 2009. Four months later inspectors visited NovaCare's Murray plant and took samples of a substance imported from China. The company kept Harvey in control but it did team with the FDA to issue a voluntary recall of the 11 tainted products in August, 2010.
All of that took place before the leaders of five dietary supplement trade groups participated in a press event with a top FDA official in December, 2010 to issue a warning that the agency would focus its resources on allegations of spiking and would seek criminal charges.
"The spiking of supplements with a drug is a crime. It endangers the public, it undermines our members and other legitimate retailers," John Gay, executive director of the Natural Products Association, said at the time.
Contacted last week, Gay declined to comment on Harvey's criminal charges or NovaCare's standing within the association. Israelsen said NovaCare is not a member of his group, which works closely with the Natural Products Association.
"I can imagine that they will do some rethinking of their membership criteria as it relates to these kind of companies," Israelsen said.
At the end of December, 2010, a week after the joint press event, the FDA sent NovaCare a strongly worded warning letter about its line of sexual enhancement pills and demanded that the company change its process, which Tolman said the company did.
Emails • A grand jury indicted Harvey four months later. The indictment includes email exchanges between Harvey and his Chinese importer that appear to document his initial debate about the drug-laced product, which he described as "a peak" because of the spike the Viagra derivative made on lab results.
"Here is my dilemma: Do I use the material with the peak that I know works very well or do I use material without the peak that keeps me safe but may not work?" Harvey wrote in one email.
Once customers complained, Harvey allegedly moved forward with the product that failed lab tests. In subsequent exchanges, Harvey sought products that would avoid FDA detection and after the FDA inspected his plant, he discusses moving the operation to Mexico or China.
"It appears there was no interest on the part of the defendant here to change business practice or behavior," said Israelsen.
He believes the FDA needs to step up enforcement and supplement makers need to do a better job of policing each other.
"The bottom line is that this is our neighborhood. This is our dietary supplement community both locally and nationally," Israelsen said. "There is clearly more that we are going to have to do."
Utah's supplement industry
Utah is one of three centers of dietary supplements manufacturing in the United States, along with southern California and New Jersey.
Industry leaders say supplement companies based in Utah see annual sales exceeding $6 billion and employ about 15,000 people when related jobs are included, making it one of the state's biggest economic drivers.
The state is home to at least nine supplement companies with more than $100 million in annual sales, including such prominent names as Nu Skin, Tahitian Noni and USANA.