Mokena Medical Device Company To Pay $1 Million Fine In Fraud Case

CHICAGO — A Mokena-based medical device company will pay a $1 million fine to resolve a federal criminal investigation into the alleged selling of misbranded products imported from overseas, the U.S. Attorney's Office said last week.

Advanced Inventory Management (AIM) Inc. admitted in a filing in U.S. District Court in Chicago that from 2017 to 2019, the company imported medical products from international distributors at cheaper prices than what it would have paid to U.S. distributors, then manipulated them to resell at marked up prices, the U.S. Attorney's Office said.

Once the products arrived in the U.S., company employees—under the direction of its sole owner and Chief Executive Officer, Anthony Iaderosa, 52, of Mokena—used a hair dryer to remove labels that had cautioned the products were only available for resale in a specified country and not in the United States. The company then re-sold the products to customers in the U.S. at a substantial markup, resulting in profit margins of 35 to 50 percent. In total, AIM admitted that it made profits of approximately $500,000 by employing this tactic, the United States Attorney's Office said in a release.

The investigation of AIM and Iaderosa is being resolved with deferred prosecution agreements, under which the company and Iaderosa admitted that the tactic rendered the products misbranded under the U.S. Food, Drug, and Cosmetic Act. The company and Iaderosa further admitted that they deliberately concealed the tactic from the U.S. Food and Drug Administration and caused false statements to be submitted to customs agents, the release reads.

The U.S. Attorney’s Office filed a one-count criminal information charging AIM and Iaderosa with misbranding of a medical device with the intent to defraud. Under the agreements, the government will defer prosecution on the charge against AIM for three years and the charge against Iaderosa for one year, and then seek to dismiss the charges if the company and Iaderosa abide by certain conditions.

Among other things, the company agreed to pay a $1 million fine to the Department of Justice and implement a new compliance and ethics program designed to prevent violations of federal food and drug laws, as well as provide annual reports to the government regarding remediation and implementation of the program. If AIM or Iaderosa fail to completely fulfill each of their obligations during the terms of the agreements, the U.S. Attorney’s Office can initiate prosecution of the charged offenses.