Veterinary-drugs peddler eludes justice

Sean Gerson remains in business despite years of pursuit

Published: September 19, 2016
By Edie Lau

Sean Gerson
Screen shot from Facebook posting
Sean L. Gerson

Sean Lawrence Gerson owes $444,700 in fines to the state of California for selling unauthorized, imported pet flea-control products.

He’s amassed debts of $174,311 to World Logistics Services Inc., for pet medications sold but not delivered; $49,699 to a fellow racetrack aficionado, Jay Manoogian; and $19,652 to the University of Pennsylvania New Bolton Center for equine veterinary care.

Gerson’s company, Vaccination Services Inc., appears to be $13,798 in arrears to Walco International, a subsidiary of Animal Health International, for unspecified products or services.

The debts, laid out in abstracts of judgments entered in Orange County, California, where Gerson lives and works, stem from a decade of regulatory enforcement actions and lost court battles. The string of judgments have done little to impede his ventures in pet-medication sales, however.

A felony conviction in Texas for delivery of a dangerous drug has not stopped him, either.

Gerson, 48, who is neither a veterinarian nor a pharmacist, dispenses veterinary drugs to consumers who order online from websites that beckon, “Prescription from your local veterinarian NOT required!” Dispensing prescription drugs without prescriptions is illegal, authorities say.

Gerson’s ability to stay in business demonstrates the apparent ease with which someone in the shady arena of pet-medication sales can elude justice. Gerson’s tactic seems to be simply daring to shrug off bills, ignore court summons and disregard court orders, along with frequently changing addresses, all the while continuing to ply an illicit trade in veterinary drugs. Public records documenting Gerson’s history suggest that, far from being chastened by pursuit from regulators, law enforcement and creditors, he remains deeply involved in the field, whether selling over-the-counter flea and tick control products for cats and dogs; prescription veterinary drugs without prescriptions; and possibly counterfeit medication.

The universe in which Gerson operates is rife with cheating. The National Association of Boards of Pharmacy states that 96 percent of 11,000 online drug outlets it has reviewed “appear to be operating in conflict with pharmacy laws and practice standards.” In this environment, chasing suspicious businesses can feel futile, said Dr. Kimberly May, communications director of the American Veterinary Medical Association, which regularly hears from its members about websites that hawk drugs of dubious origin or purvey questionable veterinary advice.

“It’s a game of whack-a-mole,” she said, referring to the carnival game in which players smack toy moles with a mallet only to see more pop up. “I’m not saying it’s not worth fighting. You do the right thing by trying to shut them down. But then you do the best thing by taking their business away from them.” That's done, May said and others said, by educating pet owners about the risks of purchasing drugs from illegitimate sources and how to identify trustworthy outlets.

Regulators asked about Gerson’s activities had little comment about him, referring questions to other agencies or giving cagey answers.

May noted that one of the challenges in enforcing rules in the veterinary-products sphere is the way regulatory jurisdictions are carved up. At the national level, the Food and Drug Administration, Environmental Protection Agency, Federal Trade Commission and Drug Enforcement Administration may or may not have oversight in a particular case, depending on the details.

At the state level, the practice of pharmacy and the practice of veterinary medicine are regulated by licensing boards, which usually have limited powers over people such as Gerson, who is in neither profession.

And all agencies must prioritize their resources. “The government agencies are saying, ‘Where are our big fish to fry?’ and it’s probably going to be suspected human medical fraud, not veterinary-related concerns,” May said. “That’s one of our problems.”

The State of Texas did prosecute Gerson three years ago. He was indicted by the Grand Jury of Harris County, which accused him of delivering a dangerous drug, clenbuterol, in November 2012. Clenbuterol is a bronchodilator — a drug that increases airflow to the lungs — used in horses. It's been prone to abuse in horse-racing circles and by bodybuilders and athletes.

In the 339th District Court of Harris County, Gerson accepted a plea bargain under which he pleaded guilty and was sentenced to two days in jail, fined $3,000 and assessed $339 in court costs. The crime was punishable by a fine of up to $4,000 and one year in county jail.

What is Vaccination Services?

VIN News Service photo
Vaccination Services’ address leads to a mail-services business at 23615 El Toro Road in Lake Forest, California. The store previously was located across the street at 23600 El Toro Road, one of multiple addresses associated with Vaccination Services and Sean Gerson.

A VIN News Service investigation into Gerson’s dealings started with the website, which is run by a company registered in Florida called My Dogs Has Fleas LLC. The site lists more than 150 items for sale, mostly prescription drugs — some veterinary-specific and some human drugs used in veterinary medicine. The website home page states: “Products on this web site are sold and shipped by Vaccination Services, Inc., Lake Forest, CA.”

Lionel Manners, who runs with his father, Paul Manners, told the VIN News Service in a brief telephone conversation: “We work with Vaccination Services. We’re just an intermediary. We provide people the platform” to place orders. Manners referred questions to his father, who he said would “be happy to contact you and tell you all about it,” but his father did not return the call or answer an email.

California Secretary of State records show that Vaccination Services Inc. was registered as a corporation on Oct. 6, 2003. Gerson is listed as its agent. Its address, 23615 El Toro Road, X152, in Lake Forest, is not an office but a box at El Toro Mail Boxes, a postal services and shipping business.

The VIN News Service placed an order through My Dog Has Fleas and received a box with Vaccination Services' name and address on the return label. In the package were two injectable medications: acepromazine, a central nervous system depressant; and amikacin, a powerful antibiotic that can cause detrimental side effects to the kidneys, nerves or hearing. The drugs arrived within a week as advertised — no prescription required.

VIN News Service photo
Without providing prescriptions, the VIN News Service ordered from and received from Vaccination Services powerful and potentially dangerous injectable prescription medications.

Independent laboratory analyses of the products obtained by the VIN News Service determined that they were the drugs as labeled.

How a person who is not a licensed veterinarian obtains veterinary drugs for resale is a question that has vexed the veterinary community for decades. Traditionally, pharmaceutical companies have sold veterinary drugs through veterinary clinics. But as the market for pet medications and therapeutics has grown, more players want a share of the action.

To this day, most veterinary pharmaceutical companies maintain an official policy of selling product only through licensed veterinarians — Bayer Animal Health is a notable exception — even as more and more outlets, from online pharmacies to bricks-and-mortar drugstore and big-box retail chains, carry drugs and flea-control products for pets. Their suppliers are players from the gray market, a cryptic world the Federal Trade Commission scrutinized as part of a report it published last year on competition in the pet medications industry.

Specific workings of the gray market in pet drugs and parasiticides remain oblique, although some aspects are known. Legal action against one gray-market broker led individual veterinarians in 2011 to admit publicly to selling surplus stock to, or ordering on behalf of, that broker. The profession deems such activity “diversion” and condemns it as unethical. Some veterinarians suspect — and veterinarians who have diverted have avowed — that pharmaceutical-company personnel participate in diversion.

Vaccination Services’ Gerson, during the course of three fleeting telephone conversations with the VIN News Service, indicated that obtaining veterinary drugs for resale is easy: “Just call manufacturers and they send it to you,” he said. “If you have the money, they’ll sell it to you. It’s all about money.”

He also said that veterinarians are involved in his business, and that 11 are owners. “I don’t own this place,” Gerson said. “… I’m just the office manager. I couldn’t afford to buy it myself.”

A person familiar with Sean Gerson gave the VIN News Service images of materials Gerson was said to have discarded, among them, an invoice and packing slip made out to Matthew A. Burd, DVM, at Vaccination Services. Burd is a professor in the animal science department of California Polytechnic State University in San Luis Obispo. Burd told the VIN News Service he believes his identity was stolen, as he does not know Gerson personally and has no relationship with Vaccination Services.
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He added: “We work with hundreds of veterinarians. We own veterinary clinics. We own 36 veterinary clinics throughout California and the western United States.”

He declined to identify the clinics and owners, saying he would ask them if they would be willing to be interviewed. Shortly afterward, he called back to say that during an earlier conversation, a representative from the drug company Elanco had been in his office and that he was “fired” for speaking to a reporter. Then he hung up. (Elanco denies having a business relationship with Gerson and Vaccination Services.)

‘Sophisticated fraudster’

Court documents tell a different story about Gerson’s role in the company.

“Gerson is the sole director, chief executive officer and chief financial officer of Vaccination Services Inc. (VSI), a company operating out of his home. VSI sells various pet medications by phone, facsimile and at the website Gerson, and occasionally his brother, are the only individuals involved in VSI’s operations — there are no employees,” states a 2008 California appellate court opinion on a complaint brought by the state Department of Pesticide Regulation (DPR) against Gerson and Vaccination Services.

Likewise, a suit filed by the company World Logistics Services, alleging more than $174,000 in unpaid services, states: “Defendant Gerson is a shareholder, officer and director of defendant Vaccination Services, Inc. ... defendant Vaccination Services Inc. is the alter ego of defendant Gerson in that defendant Vaccination Services Inc. was conceived, established, intended and used by defendant Gerson as a device to avoid individual liability ...”

Lawyers and plaintiffs who have attempted to hold Gerson accountable describe a wily, slippery character willing to say whatever it takes to evade responsibility.

“Sean Gerson's assertions, claims, and explanations of his activities related to the administrative actions taken by DPR were seldom, if ever, confirmed by the facts,” said Gary Knutila, a retired DPR lawyer who pursued Gerson for more than four years.

“He’s a sophisticated fraudster,” said Richard Baum, attorney for World Logistics Services.

“This is a matter that we have been trying to track down for years, literally,” said Dana Knutson, attorney for Walco International. “Long story short, it’s been very difficult to pin him down.”

State wins case but can’t collect

Among judgments entered in Orange County on Gerson — recordings that serve as property liens — the state of California's is the largest.

The state DPR went after Gerson and Vaccination Services for sales in 2003 and 2004 of pet products obtained from foreign countries. The products were the flea-and-tick preventives Frontline and Advantage, which are classified as pesticides. DPR alleged that Gerson and his company sold misbranded forms of Frontline and Advantage — versions not intended nor authorized for sale in the United States. (Notably, the labeling used metric units rather than pounds and ounces, potentially leading American consumers to apply the wrong dosage on their pets.)

The DPR also maintained that Gerson and Vaccination Services failed to register the products in the state and to report sales and pay fees based upon sales.

On appeal, Gerson did not contest those facts but argued that he could not be held personally liable for actions of the company. The state Fourth District Court of Appeal, Division Three, disagreed, saying, “… the record is replete with evidence supporting the conclusion that Gerson controlled and completed the illegal sales for which he has been fined.”

The opinion notes that Gerson completed at least 53 of 108 violations before the company was incorporated in 2003. For example, “Gerson bragged in an Oct. 4, 2002, letter that he imported over $250,000 in products per month from the United Kingdom, Germany and Australia.”

The state ended up fining Gerson $444,700 in two separate actions: After the initial complaint went to an administrative hearing in 2005, Gerson was called to account again in 2007 for continued violations. Receiving no payment in either instance, the state placed liens of $379,350 and $65,350 on Gerson properties in 2009.

Two years later, records show, banks foreclosed on two residences in Lake Forest that Gerson owned. At auction, the houses attracted prices well short of his mortgage balances, so the state received none of the proceeds.

Public documents and listings yield at least eight different home and business addresses associated with Gerson or Vaccination Services in the past seven years. A source who investigated Gerson in pursuit of a debt told the VIN News Service that Gerson frequently moves within the region of Lake Forest and Laguna Hills.

VIN News Service photo
A person with knowledge of Sean Gerson’s routine told the VIN News Service that Gerson works out of a commercial complex at 25401 Cabot Road, Laguna Hills, California. A Suburban with a vanity license plate that matches a description of Gerson's vehicle was parked at that address on Sept. 6

The website cited in the DPR complaint is still online. Gerson is the domain-name registrant.

Creditor apparently didn’t check credentials

In March 2008, as the court battle with DPR drew to a conclusion, Gerson applied for an account with Walco International, an animal-health supplier under Animal Health International Inc., a major player in the industry. “No other distributor has a broader product offering. … [It] represents over 1,000 manufacturers that supply products focused on companion animal, equine, beef and dairy cattle, poultry and swine,” according to the Animal Health International website. Animal Health is owned by Patterson Companies Inc., which also owns Patterson Veterinary, one of the largest distributors of products to veterinary clinics.

Walco accepted Gerson’s application but soon likely regretted it. In a suit filed in October 2009 against Vaccination Services and Gerson, Walco sought payment of $33,893.76 plus interest and legal fees for “merchandise and wares sold and/or services rendered.” (The complaint does not specify what Gerson and his company purchased, and it is unclear why the judgment entered with Orange County is for only $13,798.)

The suit includes a copy of Vaccination Services’ application for a Walco account. Lines on the form were left blank where an applicant would provide a veterinary license number, pharmacy license number, drug wholesaler’s license number, Drug Enforcement Agency license number, U.S. Department of Agriculture license number or similar credential indicating authority to deal in veterinary drugs.

Asked why Walco extended credit and did business with Gerson and Vaccination Services without that information, Knutson, the attorney pursuing the case, said: “In the vast majority of cases I handle, nobody really bothers to dot the i’s and cross the t’s until the worst-case scenario happens, and then it’s too late. What you describe is not too unusual, unfortunately.”

Large orders paid by wire unfilled

In 2009, Gerson also ran afoul of a customer, World Logistics, which its attorney, Richard Baum, describes as a “transshipper of various kinds of medication for humans and veterinarians” that buys and sells “very large quantities of medications,” both prescription and over-the-counter drugs. The company is based in Barbados.

A court statement given by Deepak Anand of World Logistics gives this account:

After finding and Vaccination Services through a Google search, Anand called and spoke with Gerson, who represented himself as president of the company. Anand subsequently placed two orders with Vaccination Services, which were filled.

In early 2009, Anand ordered and paid by wire for $169,098.50 in pharmaceuticals for delivery to a city on the border of Canada, to be later shipped overseas. The order arrived in three shipments and was never entirely fulfilled. The worth of undelivered merchandise was $62,360.

Before problems developed with the large order, Anand placed a second order. He made payment, again by wire, of $110,238.85. The order never arrived. Anand went around and around with Gerson by phone, email and text message over several months, fielding excuses from Gerson and trying to follow plans for pickup that didn't pan out. Anand finally referred the issue to a lawyer, concluding, “This case has every earmark of being a fraud, particularly since Gerson is an avid gambler on horse races and even maintains a syndicate which owns a number of horses.”

Debts incurred on racehorses

Two other judgments against Gerson relate to racehorses. Jay Manoogian, CEO and president of a property maintenance company in Irvine, California, entered one in 2012 for about $50,000. According to Manoogian, the claim stemmed from a loan of $100,000 he made to Gerson to buy a horse. Gerson failed to pay the loan fully and on time so Manoogian took the dispute to court. He said Gerson has since resumed making payments and the debt is nearly paid off.

The University of Pennsylvania New Bolton Center, which provides equine veterinary care, entered a judgment for $19,652 in 2015. According to a complaint lodged in Pennsylvania the year before, Gerson obtained veterinary care for two horses in October and November of 2012 at the cost of $17,179.03, of which he paid $2,500. (The balance rose with interest, monthly service charges and legal fees.)

Eli Lilly ‘wins’ by default

In late 2013, the pharmaceutical giant Eli Lilly hit Gerson with a trademark-infringement suit. Gerson did not respond or show up in court. He lost by default.

The suit accuses Gerson and Singpet Pte Ltd. of Singapore with unauthorized marketing and sale of European and Australian versions of its Elanco-branded flea-control medication Comfortis to customers in the United States.

The court decision permanently barred Gerson from dealing in flea-control medicines bearing or promoted in connection with Lilly’s Elanco name and mark. (Elanco is Lilly’s animal health brand.) However, Gerson seems undeterred. The website, which states that its orders are fulfilled by Vaccination Services, lists Comfortis as well as another Elanco parasiticide, Trifexis, for sale.

Asked whether Elanco is aware that Gerson apparently continues to sell its products and whether it finds civil court action to be effective, Christina Gaines, a company spokeswoman said by email, “We don’t comment on specific legal strategy.”

Instead, she provided a company statement about the general problem of illegal internet sales. It reads in part: “[T]he vast majority of so-called internet pharmacies do not require a prescription, and operate out of compliance with the laws and standards put in place to protect patient/animal safety within the relevant jurisdiction.”

Who’s legitimate?

The statement urges consumers to protect themselves and support efforts to combat drug counterfeiting by purchasing from legitimate suppliers. “Buying through established channels — for instance, obtaining a prescription from an in-person meeting with a physician or after your animal(s) have been examined by a veterinarian and filling it at a reputable pharmacy — will also help ensure this supply chain remains intact.”

Gaines later added, after learning that Gerson insinuated that Elanco is a party to his drug sales: “With the previous litigation history between Mr. Gerson and other companies (including Elanco), his statements do not appear to align with the facts. Elanco has a track-and-trace program in place where we actively track the sale of our products to ensure they are being sold through legitimate channels.”

Regulators mainly mum

When veterinarians alerted the AVMA to, the association notified the FDA, according to May, the AVMA communications director. May said the FDA forwarded the matter to the National Association of Boards of Pharmacy (NABP), which sent an email confirming that the My Dog Has Fleas website “does not appear to meet NABP patient safety and pharmacy practice standards in that it sells prescription drug products without requiring a valid prescription.”

The message did not address how the activity could be stopped.

California agencies that oversee drugs, pesticides and veterinary medicine had little to say on the record about Vaccination Services and Gerson.

When asked about Gerson’s unpaid fines to DPR, agency spokesman Craig Cassidy stated by email: “We feel DPR achieved its main goal, which was to force him to comply with the law as it relates to sales of unregistered pesticides.”

Asked whether the pesticide products that Gerson apparently continues to sell online are registered, Cassidy replied: “DPR’s Product Compliance staff monitor hundreds of stores and websites. We don’t, however, discuss ongoing compliance/enforcement activities.” He noted that state and federal authorities “are continuing to monitor Gerson’s activities.”

The California Veterinary Medical Board declined to comment specifically about Gerson and Vaccination Services except to say that Gerson is not licensed to practice veterinary medicine in the state. Executive Officer Annemarie Del Mugnaio stated generally: “The Veterinary Medical Board investigates any complaint involving unlicensed activity and if the board confirms the alleged activity, it has the authority to issue a citation including a fine amount of up to $5,000. Also, the board works with the department’s investigators and the local district attorney’s office on possible criminal prosecution in cases of unlicensed practice.”

Similarly, the executive officer at the California State Board of Pharmacy, Virginia Herold, confirmed that Gerson is not a licensed pharmacist or a wholesaler of pharmaceuticals, and noted that unlicensed activity is punishable by a $5,000 fine. She declined to say whether the pharmacy board is investigating.

New claim: selling an unauthorized generic

The trail of legal claims against Gerson continues to lengthen. Pegasus Laboratories Inc. filed suit in April alleging that My Dog Has Fleas, Vaccination Services and Gerson are infringing on and counterfeiting its trademark by selling an unauthorized generic form of drug Proin, which is an FDA-approved drug for treatment of incontinence in dogs.

Sally Bradley, director of corporate legal services and risk management at Pegasus, told the VIN News Service by email that the product being sold as Proin by Gerson et al. has the same active ingredient as the product sold by Pegasus but not the same formulation.

As to who is counterfeiting the medication, Bradley said that is a subject of continued investigation.

Gerson and the other defendants have had nothing to say about the matter. They’ve not responded to the suit. Last month, Pegasus’s lawyers filed a motion for default.

Meanwhile, in the game of whack-a-mole, another mole has surfaced. May at the AVMA said she recently became aware of a website called No Prescription Pet Meds. The home page states, “Products are sold & shipped by Vaccination Services, Inc., located in Lake Forest, California.”

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