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          November 29, 2016: Eight Defendants Convicted For Conspiracy to Manufacture and Distribute Counterfeit 5-Hour Energy DrinkPress Releases November 29, 2016: Eight Defendants Convicted For Conspiracy to Manufacture and Distribute Counterfeit 5-Hour Energy Drink
  
  	
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			**Food and Drug Administration 
			Office of Criminal Investigations****U.S. Department of Justice Press Release**For Immediate Release
			November 29, 2016
			United States Department of Justice

			Northern District of California



Defendants Sold Millions of Bottles of Counterfeit 5-Hour ENERGY Drink Manufactured in Unsanitary Conditions



SAN JOSE -  A federal jury convicted Joseph Shayota and Adriana Shayota late yesterday of conspiracy to traffic in counterfeit goods and conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Food and Drug Administration (FDA) Office of Criminal Investigations’ Los Angeles Field Office Special Agent in Charge Lisa L. Malinowski.  The guilty verdicts followed an eight-day jury trial before the Honorable Lucy H. Koh, U.S. District Court Judge, and brings to eight the number of people convicted as part of the conspiracy.



The evidence at trial demonstrated that Joseph Shayota, 64, and his wife, Adriana Shayota, 45, both of El Cajon, Calif., were leaders of a conspiracy concerning the illegal relabeling, repackaging, and eventual counterfeiting of the liquid dietary supplement 5-Hour ENERGY. The supplement is owned by Living Essentials, who manufactured all 5-Hour ENERGY at factories in Wabash, Indiana. Living Essentials registered and owns all 5-Hour ENERGY trademarks and related copyrights.  Among the important aspects of the trademarks and copyrights are various graphical elements of the product’s labeling and packaging; the 5-Hour ENERGY trademarks and copyrighted material are displayed on every bottle of 5-Hour ENERGY and display boxes. Living Essentials did not grant licenses to any individual or entity to manufacture 5-Hour ENERGY.  Joseph and Adriana Shayota (“the Shayotas”), through their company Tradeway International Inc., doing business as Baja Exporting, LLC, agreed with Living Essentials to distribute 5-Hour ENERGY in Mexico. According to the evidence at trial, rather than distributing authentic 5-Hour ENERGY with Spanish-language labeling in Mexico, the Shayotas, along with the other charged defendants, attempted to increase their profits by diverting, relabeling, repackaging, and eventually counterfeiting the product.  The jury convicted both defendants of all the charges presented against them at the trial.



“A jury has now determined that the defendants were involved in a conspiracy to substitute a well-known product with a dangerous counterfeit of their own,” said U.S. Attorney Stretch. “We are proud of the hard work of our law enforcement partners in the Food and Drug Administration and the Federal Bureau of Investigation who have worked so hard to uncover the evidence necessary to bring these criminals to justice.”



“U.S. consumers rely on the FDA to ensure that their foods – and drinks – are safe and wholesome. When criminals introduce counterfeit foods into the U.S. marketplace, they not only cheat consumers, but place consumers’ health at risk,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue to pursue and bring to justice those who jeopardize the public’s health.”



Under its agreement with Baja Exporting, LLC, Living Essentials agreed to manufacture the liquid 5-Hour ENERGY product and provide Spanish-language labeling and display boxes to the exporter.  Under the agreement, the 5-Hour ENERGY product provided to Baja was to be distributed only in Mexico.  The agreement also specified that Living Essentials would provide to Baja a “complete product package” including Spanish-language labeling.  The evidence at trial demonstrated that the Shayotas and charged codefendants diverted the product in order to sell it in the United States at a higher price. After initial efforts to sell the product failed because of the Spanish-language labeling and display boxes, the Shayotas took additional steps to profit illegally from the 5-Hour ENERGY product.



The Shayotas and other defendants next replaced the labeling and display boxes with counterfeit labels and boxes in English designed to imitate Living Essentials’ packaging in the United States. The defendants relabeled and repackaged over 350,000 bottles of 5-Hour ENERGY.  The defendants removed the legitimate lot numbers and expiration dates, replaced them with false labeling, and sold them in the United States at a price that was lower than what Living Essentials charged for authentic United States 5-Hour ENERGY. By December 2011, the Shayotas had sold off Baja’s remaining stock of the repackaged/relabeled 5-Hour ENERGY.



Further, the evidence at trial demonstrated that by early 2012, the Shayotas and other defendants began to substitute the entire 5-Hour ENERGY product with a counterfeit product. They manufactured the counterfeit 5-Hour ENERGY liquid at an unsanitary facility using untrained day workers, and mixed unregulated ingredients in plastic vats while attempting to mimic the real 5-Hour ENERGY products.  From approximately December 2011 through October 2012, the defendants ordered more than seven million counterfeit label sleeves and hundreds of thousands of counterfeit display boxes, and placed false lot and expiration codes on the bottles and boxes.  They often changed the lot and expiration codes on the counterfeit bottles and boxes to parallel the valid codes being used on the authentic product.



In addition, evidence at trial demonstrated that from May 2012 to October 2012, Midwest Wholesale Distributors, a company owned by defendant Walid Jamil, distributed more than four million bottles of counterfeit 5-Hour ENERGY into commercial channels throughout the United States. Midwest sold over 500,000 counterfeit 5-Hour ENERGY bottles to Baja Exporting and over 3,500,000 counterfeit 5¬ Hour ENERGY bottles to the Dan-Dee Company, which was owned by defendants Kevin Attiq and Fati Attiq.



A Superseding Information was filed on June 29, 2016, charging the Shayota’s, Jamil, the Attiqs, and four others with conspiracy to traffic in counterfeit goods, in violation of 18 U.S.C. § 2320(a); and conspiracy to commit criminal copyright infringement and conspiracy to introduce misbranded food into interstate commerce, in violation of 18 U.S.C. § 371.



Joseph Shayota and Adriana Shayota are out of custody pending sentencing. Their sentencing hearing is scheduled for April 5, 2017, before Judge Koh in San Jose.  The maximum statutory penalty for conspiracy to traffic in counterfeit goods is ten years’ imprisonment, a fine of $2,000,000 and restitution.  The maximum statutory penalty for conspiracy to commit criminal copyright infringement and conspiracy to introduce misbranded food into interstate commerce is five years’ imprisonment, a $250,000 fine, and restitution.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.



Six defendants, listed below, have pleaded guilty.





Defendant
			Guilty Plea
			Sentencing DateKevin Attiq, 58, of El Cajon
			Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371
			February 1, 2017Raid Jamil, 47, of West Bloomfield, Michigan
			Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371
			May 17, 2017Walid Jamil, 66, of Troy, Michigan
			Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 23202(a), and Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371
			April 26, 2017Mario Ramirez, 57, of San Diego, California
			Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371
			February 8, 2017Leslie Roman, 62, of Rancho Cucamonga, California
			Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371
			February 8, 2017Justin Shayota, 33, of San Diego, California
			Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 23202(a), and Conspiracy to  Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371
			March 15, 2017

Defendant Juan Romero remains a fugitive.



Assistant U.S. Attorneys Matt Parrella and Susan Knight are prosecuting the case with the assistance of Lakisha Holliman, Nina Burney, and Elise Etter.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Food and Drug Administration’s Office of Criminal Investigations.



USAO - California, Northern

                                                                                  Content current as of:
      01/09/2018Press Releases
 
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