- Five Utahns and one Washington resident pleaded guilty for various roles in a $100 million fraud scheme.
- The scheme involved fraudulent supplement sales using deceptive tactics and false endorsements.
- Two women charged in the scheme were acquitted, while two other defendants have not submitted plea deals.
SALT LAKE CITY — Five Utahns and one Washington resident pleaded guilty to various roles in a $100 million scheme involving the sale of fraudulent supplements.
In December 2022, a federal grand jury indicted April Gren Bawden, of Salt Lake County; Chad Austin Bawden, of Salt Lake County; Phillip Gannuscia, of Salt Lake County and Puerto Rico; Makaio Lyman Crisler, of Utah County; Barbara Jo Jackson, of Utah County; Brent Goldburn Knudson, of Utah County; Richard Scott Nemrow, of Utah County; Dustin Garr, of Washington County; and Robert McKinley, of Spokane, Washington.
The defendants were accused of committing 18 crimes between January 2016 and April 2022, including conspiracy to commit wire fraud, conspiracy to commit bank fraud, conspiracy to commit money laundering, wire fraud, aggravated identity theft, and aiding and abetting money laundering, according to court documents. In March 2023, Jessica Bjarnson Gannuscia was added to the indictment for a charge of criminal contempt.
The scheme involved the sale of nutraceutical, CBD and dietary supplements through a number of websites and a call center operating in Utah, according to the indictment. Advertisements allegedly promised benefits such as weight loss and the treatment of seizures and cancers, included false claims about their effectiveness, and used false celebrity endorsements.
The defendants used "deceptive" sales tactics to mislead consumers about the price of products, the ability to return items or obtain refunds, and automatically enrolling them in recurring subscription payments without the customer's knowledge, the indictment states.
To facilitate "tens of thousands" of misleading online sales, the defendants were accused of setting up hundreds of "false storefront" websites, "sham" limited liability companies, and business checking accounts. They also set up hundreds of merchant processing accounts in the names of others, but which they controlled.
The defendants used the proceeds from the scheme to purchase luxury items such as homes, a cosmetic surgery, a Lamborghini Urus, a 2020 Porsche 911 convertible and a 2021 Nautique Paragon boat, according to court documents.
"In addition to the millions of dollars benefiting the defendants, more than $64 million of the scheme proceeds were transferred overseas," the indictment says.
The almost three-year investigation into the scheme is slowly coming to a close as several defendants have entered guilty pleas or had charges dismissed.
Jackson was accused of helping recruit "straw owners" to be the named owners of merchant processing accounts that the defendants controlled. She initially submitted a guilty plea in August 2023 for one charge of conspiracy to commit wire fraud, but she withdrew her guilty plea in May this year.
Shortly thereafter, a motion was filed to ask for dismissal of her charges "based on new information obtained after entry of her plea." Prosecutors said it would be "proper" and there is "good cause" for the dismissal of her charges.
"Ms. Jackson is over 70 years old with significant health concerns and is less culpable than other codefendants," the motion for dismissal states. The motion was granted, and her charges were dismissed on May 27.
The Bawdens were accused of controlling the call center that handled complaints from online customers and recruiting additional straw owners, as well. Both pleaded guilty in February to conspiracy to commit money laundering and have sentencing hearings scheduled for Aug. 25.
Gannuscia and Nemrow worked for the entity that fulfilled and managed the product sales in the scheme and used a special software to "distribute sales across multiple merchant accounts to further and conceal the scheme," the indictment said.
Gannuscia and Nemrow pleaded guilty to the conspiracy to commit money laundering charge in April. Nemrow's sentencing is set for Aug. 25, but Gannuscia's has been postponed and will occur at a later date in conjunction with a separate federal tax evasion case, for which he will go on trial in November.
Jessica Bjarnson Gannuscia is his codefendant in the tax evasion case. She was initially charged with criminal contempt in relation to the supplement fraud scheme, but that charge was dismissed in March on the argument that she was "the sole remaining defendant without a pending resolution" and was facing more serious charges in the tax evasion case, a motion for dismissal states.
McKinley and Garr pleaded guilty in March to a misdemeanor charge of introducing misbranded drugs into interstate commerce that "failed to contain adequate directions for use," a plea agreement states. In exchange for pleading guilty to that charge, the rest of the fraud charges were dropped.
McKinley's alleged role in the scheme was assisting in the marketing of products, and Garr is accused of creating and controlling the software that aided individuals in concealing the scheme, the indictment says. McKinley and Garr were sentenced to a year of probation, plus significant forfeiture fines of $350,000 and $500,000, respectively.
Knudson allegedly managed the fraudulent merchant processing applications, and Crisler is accused of controlling some of the "sham" companies that used bank accounts to "layer" the proceeds by moving them around to conceal the origin of the funds, according to the indictment. Knudson and Crisler have yet to submit any plea deals, and no trial dates have been set, according to court documents.
