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Investigators' Reports

Undercover Cows Help Get Guilty Pleas

by Tamar Nordenberg

The cattle dealers were brothers Richard Eugene Gorr and Jeffery Lee Gorr, owners of Gorr Livestock of Petersburg, Mich. Both pleaded guilty July 18, 1996, in the U.S. District Court for the Eastern District of Michigan to buying and selling cattle between 1988 and 1994 that contained illegal levels of drugs. Cows headed for slaughter with signal-emitting beepers in their stomachs and FDA agents close behind helped secure the guilty pleas.

Both brothers were sentenced Oct. 10, 1996. They were each fined $25,000--five times higher than the recommended sentencing guidelines--because of the extent of their conduct and their profit-making motive. Also, each must serve three years' probation and perform 150 hours of community service.

No injuries were attributed to the Gorr cattle, but cows with illegal drug residues can pose significant health hazards if the cows are used for human food, according to FDA. People allergic to antibiotics can suffer severe, even fatal, allergic reactions to the residues. Also, illegal antibiotic residues can cause diarrhea and other stomach and intestinal problems, vitamin deficiencies, and resistance to antibiotic medications.

To ensure a food is free of harmful drug residues when eaten, FDA requires a "withdrawal period" between the time an animal is medicated and the time it is slaughtered for human food. This gives the drug time to metabolize.

FDA's undercover investigation revealed that Gorr Livestock bought sick, old cattle that were often treated with antibiotics and other drugs--either by the farmers who sold the cattle to the Gorrs or by the Gorrs themselves--and sold the cattle without regard to the withdrawal periods.

FDA first became aware of the extent of the Gorrs' violations in 1992, when a Michigan Department of Agriculture inspector traced slaughtered dairy cows with illegal drug residues to Gorr Livestock.

In March 1993, FDA Detroit district employees Michael Owens, an investigator, and Judith Jankowski, a tissue residue monitor, went to slaughterhouses in western Michigan to follow up on reports of about 300 violative tissue samples in the Gorr Livestock area. The violations had been reported to FDA by the U.S. Department of Agriculture, which collects cattle tissue samples from slaughterhouses, tests them for antibiotics and other drugs, and reports illegal drug residues to FDA.

In Michigan, Owens interviewed farmers who were believed to be the source of animals with violative residues. The interviews revealed that in many cases, the animals didn't really come from their farms. In one case, a farm thought to be the source of a violative dairy cow didn't even keep dairy cows--only steers.

The discrepancies led FDA to suspect the Gorrs of widespread violations, including switching the medicated cows' identifying tags so they couldn't be traced to Gorr Livestock.

"It became clear the Gorrs did this a lot--selling medicated cattle with the hope that USDA wouldn't test the cattle and detect the illegal residues," says Ross Parker, an assistant U.S. attorney in Detroit who prosecuted the brothers.

Between September 1988 and February 1996, FDA and the Michigan Department of Agriculture warned Gorr Livestock about findings of 36 illegally medicated cattle. In addition, USDA warned the Gorrs in writing 12 times about illegal drug residues.

To get proof that the Gorrs were violating animal drug laws, FDA's Office of Criminal Investigations conducted three "sting" operations, in June, August and November 1994.

OCI special agents, with the help of Owens and Jankowski, began by observing the Gorrs' daily routine, including the days they usually took their cattle to auction or to slaughterhouses. Then, the agents posed as cattle dealers in southeastern Michigan, observing the Gorrs' illegal activities and documenting them on audio- and videotape.

For each sting operation, the agents obtained a cow headed for slaughter. With the assistance of the Michigan Department of Agriculture, they placed a transponder, or beeper, in the cow's stomach. The beeper was inserted through the cow's throat using a speculum, the way a cow is given medication.

Because transponders allow authorities to track an animal without a telltale mark like an ear tag, they have been used in Africa to catch poachers, according to investigator Owens. "But Gorr Livestock was a unique case," he says. "It was the first time FDA had ever used a transponder in a cow for a criminal investigation."

Each beeper-carrying cow was placed on a farm with other animals. Posing as a farmer, an OCI agent told the Gorrs he wanted to get rid of a sickly cow, but he wasn't sure it could pass USDA inspection because it had been medicated recently. The cows were not actually medicated, though.

All three times, the Gorrs bought the cow, and the agents watched the brothers and waited, sometimes for up to a week. The beepers allowed FDA to track the cows to slaughter. The agents kept a receiver in their car. When the Gorrs loaded cows on a truck to transport them to an auction or slaughterhouse, the agents drove past the truck. If the receiver picked up a signal, they knew their cow was on the truck, and they followed the truck to its destination.

The Gorrs sold all three cows without waiting until the withdrawal period expired. "The more quickly they moved them, the more money they made," says an OCI agent. "Otherwise, they would have had to feed and take care of them."

The FDA investigators followed each beeper-containing animal to slaughter and retrieved the beeper, which cost several hundred dollars. "I had to cut open the slaughtered cow's stomach and stick my hands in to fish around for the beeper," Owens says.

The stings came off with only one minor hitch. After the first buy, a steer belonging to the farm FDA agents were using broke down the farm fence and eluded agents for over a mile, until they recruited a local cowboy to lasso the animal.

Armed with the evidence collected by FDA, the U.S. Attorney's Office for the Eastern District of Michigan obtained a search warrant on Jan. 20, 1995, and FDA special agents seized the Gorrs' records and drugs.

In their plea agreements, the Gorrs agreed to cooperate with law enforcement agencies in related investigations into other farmers' illegal practices. Also, they agreed to keep detailed records about their livestock.

After sentencing, FDA will closely monitor Gorr Livestock's record keeping.

Tamar Nordenberg is a staff writer for FDA Consumer.

Unapproved Dental Drug Goes Up in Smoke

Harvey Altholtz, D.M.D., president of the Connecticut firm that distributed the filler, had asserted that because his White One-Step Endodontic Formula was widely used, it was generally recognized as safe and effective and therefore not a new drug requiring FDA approval. But a U.S. district judge ruled that adequate and well-controlled studies are required to establish drug safety and effectiveness and, since study data on the root canal filler had never been submitted to FDA, ordered the product destroyed.

Stephen Souza, an investigator with FDA's Hartford, Conn., resident post, inspected Altholtz's Dental Clearing House, in Simsbury, Conn., on Jan. 18, 1992, following numerous complaints from health professionals that advertisements claimed the one-step formula "meets FDA standards" and was "FDA sanctioned." Agency records showed no approved new drug application (NDA) on file for the product.

Souza found Altholtz was distributing the formula in 60-gram (2-ounce) bottles of white powder and 30-milliliter (1-oz.) bottles of liquid. One bottle of each was to be mixed at the ordering dentist's office to create the filler.

"Altholtz had the powder and liquid made to his specifications at contract laboratories," Souza says. "The records showed that the liquid contained an approved dental analgesic-antiseptic, eugenol, and some inert ingredients. But the active ingredient in the powder was paraformaldehyde, a toxic preservative that has no approved use in drug products."

A month later FDA wrote to Altholtz, warning him that seizure or other legal action might ensue if he didn't stop selling the unapproved drug and advertising it with statements that imply approval, such as "meets FDA standards."

Altholtz wrote back, saying that an FDA official had told the formula's original owner in a 1982 letter that the agency would take no regulatory action until it reviewed the product to determine its safety and effectiveness.

"If the FDA now feels it is not a safe and efficacious product," he wrote, "I think you should poll some of the dentists who have used it and also the patients who have benefitted from its effectiveness so that you will have a total picture of its place in the modern dental world." He said FDA had suggested the precise formula at that time "so that we would be able to market in interstate commerce without requiring a prescription. ... Our boasting that this is a 'sanctioned' formulation is nothing more than a way of giving credit to the man and the agency which suggested its very makeup."

In an April 2, 1992, letter to Altholtz, FDA pointed out that while the agency official had indeed indicated FDA would defer action until after reviewing the product, the official also had informed the original owner that the product had no approved NDA on file with FDA. "This product still does not have an approved NDA," the agency stated in the letter, "and is in violation of the Food, Drug, and Cosmetic Act when introduced or delivered for introduction into interstate commerce."

The letter further explained that FDA does not "poll" users to determine drug effectiveness. "The responsibility for determining this rests with the drug manufacturer and must have some basis in science not testimonials," the letter stated, adding that adequate and well-controlled studies provide the basis for the agency's evaluation of a drug. The letter also explained that the agency had not suggested the precise formula but had quoted it from a letter from the original owner. "We strongly object to reference that this product is FDA sanctioned because not only is it misleading, it is entirely false." FDA warned, "Continued marketing of this unapproved new drug is at your own risk."

A year later, FDA still had no approved NDA on file for the White One-Step Endodontic Formula. On July 22, 1993, Souza inspected the firm again to determine the product's marketing status.

From the firm's records, Souza learned that in August and September 1992--despite FDA's warning that the formula was an unapproved product--Altholtz had ordered about 3,000 units of the powder, which at the firm's current sales rate amounted to a six-year supply.

"I asked Dr. Altholtz if he was aware that his product did not have an approved NDA," Souza recalled. "Dr. Altholtz explained he thought someone had applied for an NDA, but he wasn't sure." Souza explained to Altholtz that he must apply for his own NDA and that this generally involves animal and clinical testing to prove the product is safe and effective.

Altholtz replied that this would be too costly. He then showed Souza FDA's 1982 letter to the original owner of the formula and claimed that the FDA official's statement about not taking regulatory action until reviewing the product allowed him, Altholtz, to market the product. Souza reiterated that Altholtz needed his own NDA.

Souza collected product samples and promotional literature, noting that, as required for approved drugs, no additional labeling, insert or instructions accompanied the product. He noticed, however, that Altholtz had removed references to FDA in the promotional literature.

On Feb. 25, 1994, at FDA's request, the U.S. attorney in Hartford filed in the U.S. District Court for the District of Connecticut a complaint for forfeiture and a warrant for the arrest of the White One-Step Endodontic Formula. U.S. marshals seized the product March 22 at the Dental Clearing House and ordered the company to detain the product until further court order.

On March 28, 1996, U.S. District Judge Janet Bond Arterton ordered the seized unapproved new drug condemned, forfeited and destroyed and ordered Dental Clearing House to pay all costs.

On June 20, 1996, Russell Sinni, supervisory deputy U.S. marshal, and Patricia Murphy, FDA consumer safety officer, met Altholtz at the site of his now defunct Dental Clearing House to identify the seized product. Jesse McCool, of Clean Harbors Environmental Services, Bristol, Conn., placed the bottles into a 5-gallon drum and sent the drug by truck to Natick, Mass., to be processed. From there, the product was sent to a toxic-waste disposal site in Nebraska, where it was burned in an incinerator and buried.

--Dixie Farley

Ex-Bard Executives
Sentenced to Prison

The former executives for C.R. Bard Inc., of Murray Hill, N.J., and Bard's U.S.C.I. Division, in Billerica, Mass., approved the illegal activities in the late 1980s to boost company profits and maintain Bard's market share in an increasingly competitive field, according to the U.S. Attorney's Office, which prosecuted the case. Bard is a major medical device manufacturer.

U.S.C.I. produces the company's heart catheters.

Chief Judge Joseph Tauro of the U.S. District Court for the District of Massachusetts sentenced the three men Aug. 8, 1996, almost one year after the three were convicted following an eight-week jury trial. In addition to prison, he sentenced them to two years of supervised release and assessed them a $50 special fee.

Bard pleaded guilty to similar charges in 1993, and agreed to pay what was at that time the highest penalty ever imposed in a health-care fraud case--$61 million. Bard also had to implement numerous measures to prevent such illegal activities from occurring again.

The government estimated that total sales of the illegal catheters amounted to $77 million.

Catheters now made by Bard's U.S.C.I. Division have been approved by FDA.

The former Bard executives are appealing their conviction and sentence. They are David Prigmore, 56, of Natick, Mass.; John Cvinar, 50, of Winchester, Mass., and Lee Leichter, 46, of Fort Myers, Fla. Prigmore was a corporate executive vice president responsible for the U.S.C.I. Division. Cvinar was U.S.C.I. president, and Leichter was U.S.C.I. director of regulatory affairs and quality assurance.

Bard was the first company to obtain FDA approval to market a balloon angioplasty catheter in the United States and remained the only U.S. distributor of heart catheters from about 1980 to 1985, after which other U.S. companies began developing and marketing their own.

Heart catheters are used in angioplasty, a procedure to clear clogged arteries. The device, a wire with a balloon-like tip, is threaded into a clogged heart artery, where the balloon tip is inflated to flatten the clogging material against the vessel wall and then deflated and removed from the artery. The procedure helps widen the path for blood to flow to the heart muscle, thus reducing the risk of heart attack.

Investigators with FDA's New England district office collected evidence during a four-month investigation of the company in 1990. That evidence, introduced in the 1995 trial, showed that the company, with the defendants' approval, redesigned heart catheters already approved by FDA and sold them before obtaining FDA approval. The redesigning began about 1987, partly to address problems that doctors reported having with the original catheters.

Under medical device regulations, companies must file applications for premarket approval and receive approval from FDA before they can market their devices in the United States. Supplements for premarket approval applications also are required for changes made to approved devices, when the changes affect the device's safety or effectiveness. Such was the case with the Bard heart catheters.

By allowing the catheters to be put on the market, the executives essentially allowed the devices to be used experimentally in humans without patients' consent or knowledge, without doctors' knowledge, and without FDA approval. Federal law prohibits using humans in experiments of medical devices that present significant risks unless FDA has reviewed and approved the studies and the patients have consented to participate.

The redesigned heart catheters often malfunctioned, according to reports doctors made to Bard. Common problems were balloons failing to deflate in patients' arteries, balloons wrapping around the catheter, and balloons and catheter wire tips breaking in arteries.

Although the three former executives received reports of these malfunctions, they failed to report the problems to FDA, as required. And they failed to mention the problems when applying to FDA for premarket approval of the redesigned catheters.

They learned, for instance, during illegal human clinical trials and while the company's Probe B catheter was under FDA review, that the Probe B catheter tip was likely to break off in the arteries in 2 of every 100 patients. Yet, Cvinar and Leichter decided to keep this information from FDA and proceed with plans to commercialize the catheter when approved by FDA without changing the labeling to inform doctors of the risk of catheter tip breakage. FDA approved the device in January 1989, unaware of the tip breakage problem identified by the company during the illegal clinical trials.

Within three months, after receiving 33 reports of tip breakage during angioplasty with the Probe B, Bard redesigned this catheter, calling the new model Probe C. In March 1989, the company began distributing the Probe C without FDA approval for human experimentation.

In June 1989, after learning of catheter malfunctions, FDA met with Bard representatives and informed them that their catheters were illegal and subject to seizure. In June 1989, Bard initiated a recall of the Probe B catheter. In August 1989, FDA regulators, in a letter to Bard officials, told them that the Probe C catheter violated federal law because it had not been evaluated for safety and effectiveness and approved by FDA.

In September, Bard recalled the Probe C. Then, employees slightly modified Probe C, renamed it, and continued to distribute it to a few of its accounts for about another month.

After FDA told Bard later that month that it needed a new premarket approval application for its Probe C, the company discontinued that model and reintroduced Probe A, the original catheter that had problems of its own and led the company to replace it with the Probe B. But, because of Probe A problems reported to the agency, FDA seized 1,815 Probe A catheters on Feb. 22, 1990, and witnessed their destruction on Nov. 20, 1990.

Another illegal practice in which Bard executives participated was to allow manufacturing of the company's Simplus catheter in a manufacturing facility not yet approved by FDA. In approving class III medical devices, such as heart catheters, FDA also must approve the manufacturing facilities to ensure compliance with medical device good manufacturing practices (GMPs).

In its 1987 premarket approval application for the Simplus catheter, Bard said it would make and package the catheter in its Billerica, Mass., facility, an FDA-approved manufacturing plant. However, by this time, Bard had already begun to make the Simplus catheter at the company's newly acquired plant in Haverhill, Mass. Former company executives determined it would be too costly to shift the manufacturing to the facility approved by FDA. So, the company continued to make, package and eventually distribute Simplus catheters from the unapproved Haverhill plant. When FDA inspected the Haverhill site in March 1988, inspectors identified several GMP deviations.

A grand jury for the U.S. District Court for the District of Massachusetts handed down a 393-count indictment against the three former executives and others in January 1995.

In sentencing the three former Bard executives, Judge Tauro emphasized that corporate entities do not commit crimes, people do, and that executives running other companies who might engage in such conduct should bear in mind the prison terms imposed in this case.

--Paula Kurtzweil

No Place for Critters

But not any more. A Sept. 6 inspection by FDA's Baltimore district office found the warehouse finally clean and free of pests.

This came about after Happy Valley Food Inc., Washington, D.C., agreed in a consent decree with FDA and the Department of Justice to clean up its warehouse and recondition all potentially contaminated food.

The contamination problem became evident when investigator Linda Hunt of FDA's Baltimore district office inspected Happy Valley's warehouse Jan. 18 through 30, 1996. The inspection was part of the district's 1996 work plan.

Hunt found insects, animals and general filth throughout the warehouse, including five live and eight dead rats, two live cats, a live dog, several rodent nests, and hundreds of rodent excreta pellets. She also found bags of rice, flour, and potato starch with rodent-gnawed holes and noted many holes in the walls where rodents could easily enter and openings along the bottom of closed doors where rodents could hide and build nests.

Hunt took samples of several products, including rice, potato flour, and wheat flour. FDA chemists in the Baltimore district laboratory verified that the samples contained rodent nesting material, urine and excreta, and animal hair.

During the inspection, Johnny C. Chan, president of Happy Valley, told Hunt he would clean up the warehouse, repair structural defects, and withhold from distribution all products that appeared to be rodent adulterated. He also hired an exterminator, who, between Jan. 24 and 30, killed at least 10 rats, according to Chan.

However, when Hunt returned to Happy Valley on March 6, she found that conditions had not improved. Also, some of the food Chan said he wouldn't sell because of contamination had been sold.

Because contamination was so widespread, on March 12 FDA asked the U.S. attorney for the District of Columbia to file a complaint for seizure of all the company's food products, except for canned and refrigerated products, which showed no evidence of contamination.

The complaint was filed March 15 in the U.S. District Court for the District of Columbia, and on March 19, the U.S. Marshals Service seized food products worth more than $52,000.

During a visit to the warehouse on March 21 to ensure that the seized products were still intact, Hunt and a deputy U.S. marshal found two cartons missing and the tape used to secure the items torn. They discovered more seized items missing during a visit on March 26. Tony Chan, vice president of Happy Valley, said employees had mistakenly taken the seized products. To prevent future mistakes, U.S. marshals returned to Happy Valley on April 2 and moved all seized merchandise to a rear storage area of the warehouse where it could be easily monitored by management.

The consent decree, signed April 30, required the firm to post a $104,000 bond and established the steps the company would have to take to recondition the food and clean up and repair the warehouse. FDA approved Happy Valley's reconditioning plan, which included looking at each bag and box for evidence of rodent pellets and gnawed material. In addition, the plan called for each bag and box to be examined by a black light for the presence of rodent urine. Those bags and boxes with evidence of contamination had to be destroyed. The company also had to repair all holes in walls and window screens to prevent pests from entering the building. The reconditioning and repairs were done under FDA supervision at the firm's expense.

By Aug. 27, the reconditioning was complete, and Hunt and several deputy U.S. marshals observed the destruction of $7,500 worth of contaminated food.

--Isadora Stehlin

(Illustrations by Renée Gordon)