Alleged Drug Counterfeiter Caught : Suspect Is Linked to $700-Million Pharmaceuticals Ring

The reputed leader of an international drug-counterfeiting ring was arrested Thursday in London by an undercover U.S. Customs agent from San Diego.

The arrest of Javid Naghdi, an Iranian immigrant and former Los Angeles resident, was the culmination of an 11-month joint investigation by the Customs Service, the U.S. Food and Drug Administration and the U.S. attorney’s office in San Diego.

$700 Million in Drugs

Naghdi, 28, is believed to have masterminded the manufacture and distribution of more than $700 million worth of bogus prescription drugs, which he was attempting to sell at low prices to pharmaceutical firms in the United States.

With the help of Scotland Yard police, Naghdi was arrested in a London hotel during a meeting with Agent Daniel Supnick, posing as a potential buyer of $27 million worth of Tagamet, an ulcer medication. He is being held without bail by the British government and will be extradited to the United States to face charges of counterfeiting pharmaceuticals, conspiracy and wire fraud.

The drugs being peddled by Naghdi were counterfeit versions of Tagamet, which is also commonly prescribed for patients recovering from surgery; Naprosyn, used to relieve arthritis symptoms, and Anspor, an antibiotic. They were not manufactured according to FDA standards--in some cases aspirin was substituted for the drug’s active ingredient--and could either be ineffective for the intended purpose or cause serious injury in unsuspecting users, according to Assistant U.S. Atty. Phillip L.B. Halpern.

Customs officials are confident that distribution of the fake drugs was halted before they reached the United States. However, the investigation showed that some of the drugs may have already been sold in Iran, Iraq, Africa and India.

Lab Sites Unknown

Ken Ingleby, head of the Customs office in San Diego, said the location of the drug-manufacturing labs is still unknown but it is believed they were outside the United States. Ingleby also said he is confident that the labs are out of operation.

Ingleby described Naghdi as intelligent and articulate, a young man well-versed in international business practices and used to living an affluent life style. Born in Tehran, Naghdi came to the United States in 1979 and attended St. John’s University’s pharmacy school in New York. After working as a pharmacist in Los Angeles for some time, he apparently abandoned his legitimate career and used his expertise to begin counterfeiting.

He was arrested by the FBI in Los Angeles in February, 1987, and charged with conspiracy, trafficking in counterfeit goods, and manufacturing and distributing fake Naprosyn. Naghdi pleaded guilty to the charges in June of that year, but facing a 16-year prison term, he fled the country before sentencing.

Three months later, federal officials learned of another case involving counterfeit Naprosyn.

In September, 1987, the FDA learned that various firms and individuals throughout the country had received offers of large quantities of Naprosyn, Tagamet and Anspor, available for sale at prices far below their market value.

Though prospective buyers were told the drugs were from legitimate U.S. manufacturing companies, the pharmaceuticals were reportedly available for pickup only at a warehouse in Tampico, Mexico.

Help Sought in San Diego

The FDA enlisted the help of the San Diego Customs office and Halpern because of their previous experience investigating drug-counterfeiting rings, including a steroid-smuggling operation broken up in San Diego last year.

The trail that eventually led to Naghdi, as convoluted as a best-selling spy novel, started in Los Angeles and wound through Mexico; Puerto Rico; Washington; Palm Beach, Fla., and finally to London. Naghdi, who operated under five aliases, had a variety of business associates in each city and apparently dealt with many pharmaceutical and distributing companies--some of them legitimate, others not.

Undercover agent Supnick first went to San Juan, Puerto Rico, where a company called Five Star Distributors was offering to sell quantities of the drugs at cut-rate prices, according to Halpern. But that company, it was discovered, was operating at the direction of a Washington firm called Able Distributors Inc.

Supnick began negotiating for a million bottles of the bogus Tagamet for $27 million, Halpern said. After several weeks, Supnick followed the trail back to California, to two businesses on Wilshire Boulevard in Los Angeles.

Link Made in Los Angeles

It was there that the connection with the fugitive pharmacist was first made. A man named Jack Russell, director of a company called NBC Sales Inc., told Supnick that he was acting on behalf of a Dr. Naghdi of Naghdi International in London.

The investigation later revealed that Russell and another Los Angeles businessman, Milton Polland, were guaranteeing Naghdi’s hotel bill in London, where he was registered under the assumed name of Gregorio Reynolds, according to Halpern.

Naghdi was arrested without incident, “although I think you can say he was fairly shocked,” said Halpern. Naghdi, he said, had taken substantial precautions to make sure that the undercover agent did in fact work for a pharmaceutical company.

On Thursday, federal agents also served search warrants on the offices and homes of his suspected business associates in Los Angeles, Washington and Florida, attempting to uncover further evidence of the counterfeiting operation. Halpern said it is not known whether Russell, Polland and others were involved in the conspiracy.

“Naghdi is clearly the mastermind,” Halpern said. “Without him, the counterfeiting is just not possible. We just have to determine now who was a knowing participant.

“This investigation is very important because the effects of the counterfeit drugs entering the market on this scale would be absolutely devastating, in terms of both what it could do to the consumers as well as the effect on the pharmaceutical industry.

“That is why we went to such extraordinary steps and spent an enormous amount of time and money to ensure that no drugs would reach the American marketplace.”

Halpern said the Naghdi case was the largest counterfeit-drug operation he knew of, but he added that counterfeit drug cases are becoming increasingly common. Last year, Halpern prosecuted several cases involving fake anabolic steroids that were being manufactured in Tijuana and smuggled into San Diego for use by athletes and body builders.

About 170 people--including a former Olympic track medalist--were arrested and charged with trafficking counterfeit drugs in those cases.