Case Document 1 Filed 01/09/19 Page 1 of 14 Page ID #:22

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UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
SOUTHERN DIVISION

November 2018 Grand Jury

 

 

UNITED STATES OF AMERICA, Case No. SA CR 19? COLIN NS

v. [18 U.S.C. 1343: Wire Fraud; 21
U.S.C. 331(a), 333(a)(2),
BENEDICT LIAO, 352(a), Introducing
aka ?Wada Masao,? Misbranded Drugs Into Interstate
aka "Masao A. Wada," Commerce; 21 U.S.C. 331(k),
333(a)(2), 352(a), 
Defendant. Misbranding a Drug While Held for
Sale After Shipment in Interstate
Commerce; 21 U.S.C. 331(d),
333(a)(2), 355(a): Introducing
Unapproved Drugs Into Interstate
Commerce; 18 U.S.C. 
Causing an Act to be Done]

 

 

 

The Grand Jury charges:
INTRODUCTORY ALLEGATIONS

At all times relevant to this Indictment:

A. THE DEFENDANT

 

1. Defendant BENEDICT LIAO, also known as "Wada
Masao," aka "Masao A. Wada" was a physician licensed in

California who operated the OeyamaHMoto Cancer Research Foundation,

 

 

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LLC and Oeyama?Moto Medical Group, LLC at offices located in Monterey
Park, California and later in West Covina, California. Defendant
LIAO manufactured the drug Allesgen at a location in Fullerton,
California. Defendant LIAO was a naturalized U.S. citizen who was
born in the Republic of China (Taiwan).

B. FEDERAL FOOD, DRUG, AND COSMETIC ACT

 

2. The United States Food and Drug Administration was
the federal agency responsible for protecting the health and safety
of the American public by enforcing the Food, Drug, and Cosmetic Act
One of the main purposes of the FDCA was to ensure that
human drugs sold were safe, effective, and bear labeling containing
only true and accurate information. The responsibilities under
the FDCA included regulating the manufacture, labeling, and
distribution of all drugs shipped or received in interstate commerce.

3. The FDCA defined a ?drug" to include ?articles intended for
use in the diagnosis, cure, mitigation, treatment, or prevention of
disease in man,? and ?articles (other than food) intended to affect
the structure or any function of the body of man.? 21 U.S.C.
321(9) (1) (B) and (C).

4. A ?prescription drug? was any drug which, ?because of its
toxicity or other potentiality for harmful effect, or the method of
its use, or the collateral measures necessary to its use, is not safe
for use except under the supervision of a practitioner licensed by
law to administer such drug?; or any drug which is ?limited by an
approved new drug application . . . to use under the professional
supervision of a practitioner licensed by law to administer such

drug.? 21 U.S.C. 353(b)(1).

 

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5. The FDCA further defined a ?new drug? as any ?drug? the
composition of which is not generally recognized as safe and
effective among experts qualified by scientific training and
experience to evaluate the safety and effectiveness of drugs for use
under the conditions prescribed, recommended or suggested in its
labeling. 21 U.S.C. 321(p).

6. Under the FDCA, a ?new drug" could not be distributed
unless FDA had approved a New Drug Application or an
Abbreviated New Drug Application with respect to the drug,
or it qualified for an exemption allowing distribution for clinical
testing as an Investigational New Drug 21 U.S.C.
355(a), 331(d). The manufacturer of the new drug was
required to submit information in the NDA or ANDA showing to 
satisfaction that its new drug was safe and effective for its
intended use. 21 U.S.C. 355(b)(1), 21 C.F.R. 314.50.
Drugs that were the subject of an approved IND could not be
distributed in interstate commerce unless and until the FDA approved
an NBA or ANDA for such drugs. 21 U.S.C. 355(a), 331(d); 21 C.F.R.
314.7, Investigational use pursuant to an IND
application could not begin until 30 days after the FDA received the
application. Furthermore, the investigation could not proceed, no
distribution of the drug could be made, and any individuals who had
received the drug must be taken off of it if FDA placed the drug on a
?clinical hold.? 21 U.S.C. 355(i); 21 CFR Part 312.

7. Under the FDCA, ?label" was defined as ?a display of
written, printed, or graphic matter upon the immediate container of
any article.? 21 U.S.C. 321(k). The term ?labeling? was defined
as ?all labels and other written, printed, or graphic matter (1) upon

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any article or any of its containers or wrappers, or (2) accompanying
such article." 21 U.S.C. 321(m).

8. The FDCA prohibited the introduction, delivery for
introduction, or causing the introduction or delivery for
introduction into interstate commerce of any drug that was
misbranded. 21 U.S.C. 331(a).

9. Under the FDCA and FDA's regulations implementing that law,
a drug was deemed to be ?misbranded? if, among other things, its
labeling was false or misleading in any particular, 21 U.S.C.
352(a) or if its labeling failed to bear adequate directions for
use, 21 U.S.C. 352(f)(1). ?Adequate directions for use? were
directions under which a layperson could use a drug safely and for
the purposes for which it was intended. 21 C.F.R. 201.5. By
definition, it was not possible to write ?adequate directions for
use? for a prescription drug because directions to a layperson cannot
be adequate and professional supervision was required.

10. The FDCA defined a "dietary supplement" as "a product
intended to supplement the diet that bears or contains . . . a
vitamin, a mineral, an herb or other botanical, an amino acid, a
dietary substance for use by man to supplement the diet.? 21 U.S C.
321(ff). Although general claims concerning the effect of a
supplement's ingredient on the structure or function of the body were
permitted, the FDCA prohibited any statement that a supplement can

mitigate, treat, cure, or prevent a disease. 21 U.S.C. 321(r)(6).

 

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11. On December 3, 2011, under the alias "Masao A. Wada, 

defendant LIAO submitted to FDA for review an IND application in
which he stated that he planned to engage in a clinical trial of
Allesgen. FDA received this IND application on December 15, 2011.
On January 13, 2012, FDA informed defendant LIAO that this IND
application for Allesgen had been placed on a full clinical hold.
Under the alias "Masao Wada, defendant LIAO submitted to FDA
for review another IND for a clinical trial of Allesgen, which was
dated October 3, 2012 and received by FDA on November 5, 2012. On
December 5, 2012, FDA informed defendant LIAO that this IND for
Allesgen had been placed on a full clinical hold. In the written
notices that FDA sent to defendant LIAO regarding both of these
clinical holds, defendant LIAO was told that he could not legally

initiate or resume the proposed clinical trials of Allesgen.

 

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COUNTS ONE THROUGH EIGHT
[18 U.S.C. 1343]
12. The factual allegations set forth in paragraphs 1 through
11 are re?alleged and incorporated herein by reference.

A. THE SCHEME TO DEFRAUD

 

13. From in or about July 2012 through at least on or about
January 16, 2018, in Orange and Los Angeles Counties, within the
Central District of California, and elsewhere, defendant LIAO
knowingly and with intent to defraud devised a scheme and artifice to
defraud purchasers of the drug Allesgen and to obtain money and
property by means of materially false and fraudulent pretenses,
representations, and promises, and the concealment of material facts,
namely, by distributing and causing the distribution in interstate
commerce of an unapproved new drug, Allesgen, when no NDA for
Allesgen had been approved by the FDA had placed a hold on any
distribution of Allesgen; and Allesgen's label was false, misleading,
and did not bear adequate directions for use.

14. As part of the scheme and artifice to defraud, defendant
LIAO did the following, among other things:

a. Although defendant LIAO knew that Allesgen required
FDA approval before it could be lawfully distributed in interstate
commerce based on, among other things, warnings that he received from
FDA, defendant LIAO distributed and caused the distribution in
interstate commerce of the drug Allesgen as a treatment for all types
of cancer although the drug did not have the required FDA approval.

b. Defendant LIAO distributed Allesgen in interstate
commerce after FDA placed defendant IND application on a full
clinical hold, which barred defendant LIAO from proceeding with any

6

 

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clinical study and providing Allesgen to any human subject, and did
not inform any individuals to whom he had provided Allesgen that it
was on a clinical hold and that, as a result, those individuals
should not continue to take Allesgen.

c. While promoting Allesgen as a cancer treatment,
defendant LIAO did not disclose to his customers that he had not yet
sought FDA approval for distribution of Allesgen in interstate
commerce and that Allesgen was on a full clinical hold at the times
listed below and therefore not even permitted to be used in a
clinical trial. Instead, defendant LIAO distributed and caused
Allesgen to be distributed in interstate commerce as an ?effective?
treatment for inhibiting and curing cancer that did not have side
effects. Defendant LIAO also failed to make additional disclosures
to his customers that were required by 21 U.S.C. 355(i)(4) and that
he told FDA he would include as part of his study. For example, he
failed to tell customers that he was seeking permission from FDA to
conduct an investigational study of Allesgen or describe the details
of that study; that Allesgen had side effects that were unpredictable
and could be very serious and long lasting and that there was a risk
of death; that experimental medications were provided for free; that
defendant LIAO would not charge recipients for Allesgen; and that
Allesgen would only be given to stage and IV cancer patients who
had not been helped by radiation or chemotherapy and had no therapy
available to them that provides clinical benefit.

d. regulations required that a drug distributed
pursuant to an IND application bear a label stating that it was a
"New Drug Limited by Federal . . . law to investigational use."
21 C.F.R. Defendant LIAO submitted to FDA a label that

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he proposed to use for Allesgen, which stated in accordance with
FDA's regulations, that Allesgen was an "investigational new drug"
and that Allesgen was "limited by federal law to investigational use
only.? However, defendant LIAO did not use the proposed label.
Defendant LIAO instead distributed Allesgen in interstate commerce
bearing a label that misleadingly called Allesgen a "supplement," not
a drug; said that the label "had not been evaluated by the and
failed to disclose any information about the investigational nature
of Allesgen or any other information about its status with FDA or the
potential side effects associated with Allesgen.

e. Defendant LIAO also falsely represented to FDA: that
Masao Wada was a different person than defendant that Masao
Wada was a physician who was the sponsor of the Allesgen clinical
investigation; that Masao Wada was the chairman of the Institutional
Review Board, which was required for Allesgen as an investigational
new drug; that Masao Wada was defendant LIAO's brother; and that
Masao Wada was Japanese. In reality, "Masao Wada" was merely an
alias for defendant LIAO himself, which defendant LIAO admitted in an
interview with FDA employees.

f. During the time period of approximately July 2012
through June 26, 2014, defendant LIAO sold and distributed over 400
bottles of Allesgen at a price generally set at $2,000 per bottle,
plus shipping, to customers in various states and in foreign
countries, as a result of which he received at least approximately
$814,948.95 in revenue. From approximately July 2014 through January
2018, defendant LIAO sold and distributed additional bottles of

AlleSgen to customers in various states and in foreign countries, as

 

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a result of which he received additional revenue totaling
approximately $800,000.

g. Defendant LIAO used interstate wires to conduct email
communication with actual and potential Allesgen customers and to
promote Allesgen through websites that defendant LIAO operated and
that were accessed using interstate wires, and instructed customers
to transmit funds for the purchase of Allesgen via interstate wire
transfers to a bank account controlled by defendant LIAO.

B. USE OF INTERSTATE WIRES

 

15. On or about the dates set forth below, in Orange and Los
Angeles Counties, within the Central District of California, for the
purpose of executing and attempting to execute the above?described
scheme and artifice to defraud, defendant LIAO knowingly and with
intent to defraud caused to be transmitted by means of wire
communications in interstate commerce, the writings, signs and

signals described below:

 

COUNT DATE WIRE COMMUNICATION

 

ONE 11/15/2013 Wire transfer of $6,050 by T.C. in Florida to
Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

 

TWO 11/20/2013 Wire transfer of $4,050 by D.T. in New York to
Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

 

THREE 11/25/2013 Wire transfer of $12,050 by Q.M. in Alabama to
Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

 

FOUR 12/10/2013 Wire transfer of $2,050 by B.H. in Washington to
Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

 

 

 

 

 

 

Case Document 1 Filed 01/09/19 Page 10 of 14 Page ID #:31

 

 

 

 

 

 

COUNT DATE WIRE COMMUNICATION

FIVE 12/16/2013 Wire transfer of $4,050 by T.C. in Florida to
Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

SIX 1/8/2014 Wire transfer of $2,050 by T.C. in Florida to
Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

SEVEN 2/12/2014 Wire transfer of $10,050 by B.H. in Washington to
Oeyama Moto Medical Group?s bank account
at Bank of America in Monterey
Park, California

EIGHT 3/26/2014 Wire transfer of $2,050 by W.L. in 

 

 

to Oeyama Moto Medical Group's bank account
at Bank of America in Monterey
Park, California

 

 

 

lO

 

 

Case Document 1 Filed 01/09/19 Page 11 Of 14 Page ID #:32

COUNTS NINE THROUGH SIXTEEN
[21 U.S.C. 331(a), 333(a)(2), 352(a), 18 U.S.C. 
16. 'The factual allegations set forth in paragraphs 1 through
11, 13, and 14 are re?alleged and incorporated herein by reference.
'17. On or about the following dates, in Orange and Los Angeles

Counties, within the Central District of California, defendant LIAO,
with intent to defraud and mislead customers and the FDA, introduced
and willfully caused to be introduced a drug, namely, the following
bottles of Allesgen, in interstate commerce to the following
customers outside of California, when Allesgen was misbranded
pursuant to Title 21, United States Code, Sections 352(a), in
that Allesgen's labeling was false, misleading, and lacked adequate

directions for use:

 

 

 

 

 

 

 

 

 

COUNT DATE NO. OF BOTTEES AMOUNT IBUYER LOCATION
PURCHASED PAID -
NINE 11/15/2013 3 $6,050 T.c. Florida
TEN 11/20/2013 2 $4,050 D.T. New York
ELEVEN 11/25/2013 6 $12,050 Q.M. Alabama
TWELVE 12/10/2013 1 $2,050 B.H. Washington
THIRTEEN 12/16/2013 2 $4,050 T.c. Florida
FOURTEEN 1/8/2014 1 $2,050 T.c. Florida
FIFTEEN 2/12/2014 5 $10,050 B.H. Washington
SIXTEEN 3/26/2014 1 $2,050 W.L. 

 

 

 

 

 

 

 

 

 

11

 

 

Case Document 1 Filed 01/09/19 Page 12 of 14 Page ID #:33

COUNTS SEVENTEEN THROUGH NINETEEN
[21 U.S.C. 331(k), 333(a)(2), 352(a), 

18. The factual allegations set forth in paragraphs 1 through
11, 13, and 14 are reHalleged and incorporated herein by reference.

19. On or about the following dates, in Orange and Los Angeles
Counties, within the Central District of California, defendant LIAO
having received bromelain, a component of the drug Allesgen, in
interstate commerce from Sigma Aldrich Labs in St. Louis, Missouri,
with intent to defraud and mislead customers and the FDA, held the
following bottles of Allesgen for sale, and caused those bottles of
Allesgen to be misbranded in that Allesgen's labeling was false and

misleading, and lacked adequate directions for use:

 

 

 

 

COUNT DATE NO. OF BOTTLES AMOUNT BUYER LOCATION
PURCHASED PAID
SEVENTEEN 12/27/2013 6 $12,050 T. Fremont, CA
EIGHTEN 2/4/2014 2 $4,050 D.H. Fremont, CA
NINETEEN 2/10/2014 10 $20,000 M-C. T. Fremont, CA

 

 

 

 

 

 

 

 

12

 

Case Document 1 Filed 01/09/19 Page 13 of 14 Page ID #:34

COUNTS TWENTY THROUGH 
[21 U.S.C. 331(d), 333(a)(2), 355(a); 18 U.S.C. 

20. The factual allegations set forth in paragraphs 1 through
11, 13, and 14 are rewalleged and incorporated herein by reference.

21. On or about the following dates, in Orange and Los Angeles
Counties, within the Central District of California, defendant LIAO,
with intent to defraud and mislead the FDA, introduced and willfully
caused to be introduced a new drug, namely, the following bottles of
Allesgen, in interstate commerce to the following customers outside
of California, when Allesgen had not been approved through a new drug
application filed pursuant to Title 21, United States Code, Sections

355(b), or 

 

 

 

 

 

 

 

COUNT DATE NO. OF AMOUNT BUYER LOCATION
BOTTLES PAID
PURCHASED
TWENTY 11/15/2013 3 $6,050 T.C. Florida
TWENTY-ONE 11/20/2013 2 $4,050 D.T. New York
11/25/2013 6 $12,050 Q.M. Alabama
12/10/2013 1 $2,050 B.H. Washington
12/16/2013 2 $4,050 T.C. Florida
1/8/2014 1 $2,050 T.C. Florida

 

 

 

 

 

 

 

 

 

13

 

 

Case Document 1 Filed 01/09/19 Page 14 of 14 Page ID #:35

 

 

 

 

COUNT DATE NO. OF AMOUNT BUYER LOCATION
BOTTLES PAID
PURCHASED
2/12/2014 5 $10,050 Washington
3/26/2014 1 $2,050 W.L 

 

 

 

 

 

 

 

 

NICOLA T. HANNA

United States Attorney

Chief, Criminal Division

DENNISE D. WILLETT
Assistant United States Attorney
Chief, Santa Ana Branch Office

LAWRENCE E. KOLE

A TRUE BILL



Forepers 

 

Assistant United States Attorney
Santa Ana Branch Office

SONIA W. NATE

Special Assistant United States

Attorney

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