Gabriel J. Letizia, the founder of New York cosmetic testing outfit AMA Laboratories, has been sentenced to five years in federal prison after admitting $46.2 million fraud involving fabricated results.
US District Judge Kenneth M. Karas imposed the sentence after Letizia pleaded guilty last year to defrauding customers by reporting laboratory test results for panellist testing that was not fully performed.
In addition to his prison term, Letizia, 72, of New City, New York, was sentenced to three years of supervised release and ordered to pay $1,440,238 restitution to clients and to forfeit $46.2 million.
White Plains federal court heard AMA sent its clients - at Letizia’s instruction - fraudulent test results in which AMA personnel included fictitious data for “phantom” panellists who had not actually participated in the tests.
AMA’s fees for tests were based, in part, on the number of panellists that were to participate in the study.
AMA tested products on a far lower number of panelists, typically 20 or less, rather than the 50 for which the clients had paid.
From 1987 through April 2017, Letizia and AMA personnel operating at his direction defrauded AMA’s customers of more than $46 million, the court heard.
Also at Letizia’s instruction, AMA personnel routinely falsified test results relating to its clients’ products, which included suppressing adverse reactions and deviating from testing protocols.
Clients of AMA used the test results to support their claims that their cosmetics, sunscreens, and other products were safe, effective, hypoallergenic, or provided a certain sun protection factor, including after exposure to water.
AMA clients that manufactured sunscreens used the test results to comply with FDA regulations requiring sunscreen manufacturers to have their products tested and to maintain the test results for possible review by the FDA.
From 2012 through April 2017, AMA received $46.2 million in revenue from the fraudulent reports, the court heard.
US Attorney Damian Williams said: “For three decades, Gabriel Letizia defrauded AMA’s customers and jeopardized the safety of millions of consumers, all in the name of greed.
“Thanks to our partners at FDA-OIC, the FBI, and the Rockland County District Attorney’s Office, he has now been sentenced to prison.”
