The FBI has arrested 10 people, with one more subject to an arrest warrant, in connection with a massive 5-Hour Energy counterfeit operation that was shut down three years ago.
According to the Department of Justice, the defendants bottled and sold millions of fake 5-Hour Energy drinks that ended up in most states and at many wholesale distributors.
The network of counterfeiters allegedly made fake 5-Hour Energy drinks, using unregulated products in unsanitary conditions with untrained workers. According to a Fortune article at the time that the counterfeit operation was revealed, the knock-offs had varying amounts of caffeine and sugar (which the authentic variety lacks). They also varied in color and smelled wrong. The drinks were then put into counterfeit packaging and shipped around the country.
Some of the defendants arrested yesterday were described by Living Essentials, the parent company of 5-Hour Energy, as being “among the kingpins of the nationwide counterfeiting conspiracy.”
According to the Department of Justice, it appears that that the operation began when Joseph and Adriana Shatoya struck a deal with Living Essentials to distribute the product in Mexico. Instead, the couple ditched the Spanish-language packaging for counterfeit U.S. packaging and sold the 350,000 bottles in the United States at a 15% mark-down, the DOJ said.
It was in early 2012 that the defendants moved into making their own version of 5-Hour Energy drinks. By the end of the year, when the operation was discovered, Midwest Wholesale Distributors, a company owned by another defendant, had distributed more than 4 million bottles of the counterfeit drink, according to the DOJ.