The criminal investigations unit of the IRS has released information this week on the April 7 seizure of property from James G. Cole, owner of The Big Gym in Hood River and three health-products companies based in Hood River including Maxam Nutraceutics, TurboSonic USA and Advanced Sports Nutrition.
A listing of seized property pending forfeiture to the IRS was posted in the June 8 Hood River News public notices section specifying $75,100 in cash plus gold in various forms with a cumulative value of approximately $475,000, all taken from Cole's residence at 1920 B St. in Hood River.
The residential and business raid involved 47 federal agents, Hood River City Police officers and the U.S. District Attorney who also served warrants and seized property at The Big Gym on Cascade Ave. and another of Cole's facilities at 1020 Wasco St.
"We were notified about 15 minutes prior," said acting Police Chief Neal Holste, referring to the early morning raid which, according to Holste, included search warrants from the Food and Drug Administration.
Federal agents in plain clothes and unmarked vehicles, reconnoitered with Hood River Police officers in the Walmart parking lot, split into teams and raided all three sites simultaneously. Cole was out of town at the time of the raid but his daughter was notified and in attendance.
The IRS public notice attributes the seizure and forfeiture of Cole's property to violations of 18 U.S.C. 1956 - more commonly known as money laundering.
In short the federal law defines this violation as "knowing that the property involved in a financial transaction represents the proceeds of some form of unlawful activity, conducts or attempts to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity."
Although the IRS public information officer has not confirmed a connection, Cole was recently accused of violating the Federal Food, Drug and Cosmetic Act based on false claims made for health products sold through his companies.
According to an FDA issued warning letter dated Oct. 12, 2010, Cole and his company, Maxam Nutraceutics/Maxam Laboratories, were required to correct violations related to unsubstantiated claims for health and disease-curing properties of products manufactured and sold by his companies. In the letter, Cole was warned that he would face legal action if he did not correct his violations within 15 days of the notification.
A sample of the cited unsubstantiated claims from the FDA letter follows: "PCA-Rx - Removes heavy metals, toxins, mycoplasmas and cardio and cerebral vascular plaque. Try our oral chelation therapy called clathration for autism, Alzheimer's, allergies, heavy metal detox and more."
The referenced PCA-Rx product sells for $99.99 an ounce on the company's website.
According to the website Left Brain/Right Brain: News, Science and Opinion (Oct. 14, 2010), federal regulators simultaneously warned eight companies, including Maxam, to stop selling so-called "chelation" products that claim to treat a range of disorders from autism to Alzheimer's disease.
The web article went on to quote FDA compliance expert Deborah Autor.
"These products are dangerously misleading because they are targeted to patients with serious conditions and limited treatment options," says Autor, noting that the companies are preying on people made vulnerable because of serious illness.
Maxam's products have been marketed to families whose children suffer from autism disorders and are cited on numerous autism-related blogs and websites.
Although the seizure has occurred, Cole's sales operations are still under way. The current website no longer lists health benefits or testimonials related to any of the products under FDA violation notice, but remains fully active for purchases.
A recent call to the Maxam Nutraceuticals toll-free number yielded an acknowledgement by the operator that their business was under a federal watch and that they were precluded from speaking out on behalf of their products. However, a referral to a third party website for testimonials and other product information was provided.
A phone call inquiry to Cole was not returned.
According to an article by Ethan Huff of Natural News.com published April 27, Cole is quoted following the raid as saying, "They went into the gym, they took all the paperwork, all the computers, hard drives, downloaded all of our servers, and trashed a couple of our servers going out."
A full listing of the B St. residence IRS-seized property follows: "U.S. Currency $75,100.00, Twelve Pamp Suisse 10 troy ounce Gold Bars of .999 fineness, Seven Pamp Suisse 10 troy ounce Gold Bars of .999 fineness, One Pamp Suisse 100 gram cast Gold Bar of 999.99 fineness, One Pamp Suisse 1-Kilo cast Gold Bar of 999.99 fineness, Fifteen Pamp Suisse 1 troy ounce minted Gold Bars of .999 fineness, Twenty-Five Pamp Suisse 1 troy ounce cast Gold Bars of .999 fineness, Twenty-Eight South African Krugerrands, Four Luxor Casino Limited Edition Ten Dollar Tokens, Two Coin Sets - 1983 Canadian Maple Leaf Coins of .9999 fine gold and a Two Dollar Canadian Coin, Two Coin Sets - 1999 Gold Eagle Coins 1/10 ounce gold, Twenty-two 1 oz. gold coins (4 are dated 2007 and 18 are dated MCMLXXXVI), Two 1998 Gold Eagle Coins dated 1998, and Two 1999 Gold Eagle Coins dated 1999."
According to the IRS, any person claiming an ownership interest in this property must file a claim with the Internal Revenue Service-Criminal Investigation, Special Agent in Charge - Asset Forfeiture Coordinator, by close of business on July 22, 2011.
If no claims are filed, the property will be forfeited and disposed of according to law.
The IRS contact point is: Special Agent Jeff Holm at 206-255-4226 or Jeffrey.Holm@ci.irs.gov for further information regarding seizure numbers 91110031-01 through 91110031-14.