Internet Sales of Bogus HIV Test Kits Result in First-of-Kind Wire Fraud Conviction
For the first time in FDA history, an individual has been convicted on wire fraud charges stemming from Internet use to sell an illegal medical product. Previous wire fraud charges involving illegal medical products were based only on telephone and facsimile use.
Lawrence "Larry" Greene, of Los Banos, Calif., is serving a five-year, three-month prison term for selling unapproved HIV test kits for home use over the Internet, as well as through phone solicitations to pharmacies in California's Central Valley.
Greene, 52, sold more than 100 of the test kits in 1996 and 1997, before he was jailed by local authorities on unrelated charges. An informant provided information that enabled FDA's Office of Criminal Investigations (OCI) to collect evidence that led to Greene's November 1998 conviction in the U.S. District Court for the Eastern District of California.
In fall 1997, FDA recalled the HIV test kits, as well as about 38 illegal hepatitis A test kits Greene marketed, from 35 to 40 California drugstores that had bought Greene's products. The recall was only the second in FDA history to be conducted by the agency itself. (The first was in 1977.) Generally, manufacturers recall their products voluntarily, but Greene could not recall the kits himself because he was in prison.
HIV (human immunodeficiency virus) is the virus that causes AIDS. The only approved HIV home test kit currently marketed in the United States is the Home Access HIV-1 Test System, made by Home Access Health Corp., of Hoffman Estates, Ill.
Greene sold his unapproved HIV test kit under the names Lei-Home Access HIV Test and Personal HIV Test Kit. Like the approved home-test kit, Greene's kits required a sample of blood. But unlike the legitimate kit, which requires a drop of blood to be placed on specially treated, pre-tested paper, Greene's version directed users to place a drop of blood on an opened Band-Aid attached to a card that was then returned to Greene. Even though he didn't send the blood samples to a laboratory for testing and had no scientific or factual basis for making a decision, Greene provided users with fabricated test results. He also did not provide counseling, as the manufacturer of the approved HIV test kit is required to do when it informs users of test results.
"It's unbelievable what he did," said Susan Corrales, a consumer safety officer in FDA's Center for Biologics Evaluation and Research. "There was no evidence that the blood samples were tested by a laboratory. His wife said he could tell whether a person was HIV negative or not by holding the sample up to a light. He was basically flipping a coin and saying yes or no."
FDA learned of Greene's illegal home-test kit in September 1997 through industry complaints to the agency's Center for Biologics Evaluation and Research, which regulates HIV home sample collection kits. The complaints alleged that an unapproved HIV home-test kit was being marketed on the Internet and in newspapers and magazines.
The center identified the kit's manufacturer as Lei-Home Access Care, a division of Jin-Greene Biotechnology Inc., of Sunnyvale, Calif. Greene was the owner of both.
Despite several visits, FDA investigators were not able to gain access to the building at the Sunnyvale address. Their knocks on the door went unanswered, even though the investigators could hear people talking inside.
About this time, an informant called FDA to express concerns about Greene's activities. The informant provided sufficient information, including sales records, to link Greene to the Internet marketing of the illegal test kits.
The district office forwarded the case to OCI, which tracked down Greene's home address in Los Banos. There, an OCI special agent interviewed Greene's wife, who mentioned that Greene had sold some of his kits to drugstores in California's Central Valley. OCI also learned that Greene was incarcerated at the local county jail.
FDA investigators visited the drugstores, many of which, according to Andrea Scott, a compliance officer in the agency's San Francisco district office, were "mom-and-pop" operations. When told about the phony HIV test kits, she said, "the pharmacists were totally snowed. They were flabbergasted and [a little bit] humiliated that they had been duped."
The pharmacists reported that they had sold several of the kits to their customers. "That's when we knew we had a recall on our hands," Scott said.
FDA investigators removed the kits from the pharmacies and posted notices in English and Spanish on the doors of the drugstores, warning consumers who may have bought kits to be retested for HIV infection. The notices also were given to representatives of high-risk AIDS groups for their dissemination.
From sales records, OCI learned that Greene also had distributed kits to about 30 Internet customers as far away as New York and Florida. FDA notified the Internet customers that the test they had purchased was not reliable and that they should seek a health professional to be retested with an approved test.
On Sept. 26, 1997, FDA issued a press release, urging pharmacists to remove the unapproved HIV test kits from their shelves and advising consumers who had bought them to consult with a health professional about other available approved tests.
The press release also cautioned against use of Greene's hepatitis A kit, called the In-Home Hepatitis A Test Kit, which had been sold only to the drugstores -- not over the Internet. FDA has not approved a home-test kit to detect hepatitis A, a virus that can cause a food-borne liver disease.
Greene's kits were packaged in plain white cardboard boxes with only a computer-generated label affixed to the outside. The box's contents included the opened Band-Aid for placing a drop of blood, as well as a stylus for pricking the finger and another little Band-Aid to place over the wound.
"[They were] nothing like you and I would buy," Scott said. "They were very amateurish in appearance."
Greene's HIV home-test kits sold for about $40 each on the retail market, about the same as the legitimate kits.
A Dec. 11, 1997, OCI-obtained federal grand jury indicted Greene and his two companies on seven counts of mail fraud and 36 counts of wire fraud related to selling the unapproved kits. At the arraignment hearing on the indictment, Greene was denied bail and transferred from county jail to federal custody.
Greene waived his right to a jury and served as his own lawyer before U.S. District Judge Robert Coyle during a two-day trial in November 1998. Among those who testified were representatives of the company that set up the Website for Greene and the company that took phone orders for kits.
Coyle convicted Greene on Nov. 18, 1998, of six counts of mail fraud and 11 counts of wire fraud. Finding that Greene's conduct was extreme in the emotional impact he inflicted on his victims, Judge Coyle sentenced Greene Feb. 24, 1999, to a punishment more severe than usual for a fraud case. Also, the judge agreed with the prosecution's conclusion that Greene was a prime candidate for recidivisim. In fact, while in prison awaiting his conviction on the charges related to selling the bogus HIV test kits, Greene tried to extort $500 from a fellow prisoner's mother for legal counsel he said he provided to her son. Greene is not licensed to practice law.
FDA continues to monitor the marketplace, including the Internet, for illegal HIV test kits. According to Susan Corrales, Internet marketing of such kits tends to be common. She cited the public's heightened awareness of HIV as the reason. "People are looking for an HIV test that is confidential and provides test results in the privacy of their homes," she said. "And Internet selling of these unapproved kits is one way to take advantage of this."
Scott agreed. "[Greene's HIV test kit] was a dangerous product we were able to get off the market," she said. "But there are a lot of other companies out there trying to take advantage of people's fears by scamming them out of their money. That's the scary part."
Paula Kurtzweil is a member of FDA's public affairs staff.