David Whitaker, Con Artist, Describes Google Sting Operation That Cost Company $500 Million

David Whitaker

First Posted: 02/ 1/2012 3:58 pm Updated: 02/ 1/2012 6:45 pm

CENTRAL FALLS, R.I. - When federal investigators decided to look into whether Google Inc. was letting rogue pharmacies from overseas target American consumers with advertising, they turned to a convicted con artist with experience pushing pills on the Internet.

That man, David Whitaker, says he became a pill peddler to support his life on the lam — hawking placebos and tiny water vials online that became a hit with bodybuilders searching the Internet for steroids and other drugs. Now serving a prison sentence for fraud, Whitaker says he spends a lot of time thinking about "the people hurt by the pill problem in America."

In an interview with The Associated Press at a private prison in Central Falls, Whitaker, 37, described for the first time how he took up the online pharmacy business while hiding in Guadalajara, Mexico, from a federal indictment for a multimillion dollar fraud case in Rhode Island.

His experience helped federal investigators orchestrate a 2009 undercover sting that resulted in Google forfeiting $500 million last year. The forfeiture allowed Google to avoid criminal prosecution for allegations that it improperly profited from ads promoting Canadian pharmacies that illegally imported drugs into the United States. U.S. Food and Drug Administration investigators found employees helped create advertising on Google's AdWords system for products they were told were manufactured overseas and did not require customers to have a valid prescription, authorities have said.

"It really changed my life working with the agents with the FDA," said Whitaker, wearing beige, prison-issued clothing.

Businesses using AdWords select keywords for advertising. When people search on Google using a business's keyword, that ad may appear next to the search results.

Shipping prescription drugs into the U.S. is illegal, investigators have said. When the forfeiture was announced, Rhode Island U.S. Attorney Peter F. Neronha said had the case gone to trial prosecutors would have had to prove that Google helped pharmacies violate federal law.

The Internet search engine has said it banned the advertising of prescription drugs in the U.S. by Canadian pharmacies and that it should have never allowed the ads. In 2010, Google announced new restrictions for online pharmacies seeking to advertise with AdWords. A company spokeswoman declined to comment on Whitaker's account of the investigation.

Whitaker has posted a written account of the Google probe online and shares details about his jet-setting past, criminal history and bipolar disorder on a website that is maintained by his lawyer.

He also says he saw the Google representatives he was tasked with snaring as "good people," but the operation convinced him Google was creating an "urgent danger."

One Google representative in Mexico, he said, didn't bat an eye after hearing plans about advertising the prescription abortion pill RU-486. Whitaker said he thought the venture would end the investigation.

"I was actually nervous and afraid. My voice would get shaky talking to him," Whitaker said.

He was wrong. Authorities placed an ad for RU-486 including the language "no prescription needed."

Whitaker fled to Mexico in 2006 while being investigated for allegations he defrauded customers of an electronics business, according to an affidavit filed in federal court.

Even though he was accused of being involved in a multimillion dollar-fraud, Whitaker said he still needed cash while on the run.

He said he got the idea to sells drugs online while visiting a farm supply store. The store had a ceramic horse and cow out front and sold steroids inside, Whitaker said.

Whitaker launched a modest enterprise working a few days a week.

Eventually, he said he expanded by hiring a lawyer and doctors. At its peak, the business was grossing $1 million in monthly revenues, said defence attorney Joseph Balliro Jr.

Whitaker credits AdWords with helping the business take off. He recalls talking with a Google representative in Buenos Aires, Argentina, about the anti-aging, bodybuilding and weight-loss products the site was selling.

"She did not hesitate at all and wanted to start advertising it right away," said Whitaker, reading from a written account of his time in Mexico. He said he deposited $30,000 to start.

"Once they know you had the money to spend, they let you advertise," Whitaker said.

As calls came in from bodybuilders wanting muscle-growing drugs, Whitaker said he consulted with doctors working for him and made a major change, developing a placebo targeting bodybuilders. In a more brazen move, Whitaker said he started selling $1,000 millimeter vials of what he marketed as an injectable sterile liquid purporting to offer multiple health benefits, but was actually water.

Whitaker recalled being surprised by the rave reviews from customers.

"I was expecting people to say, 'This stuff doesn't work,'" he said.

Whitaker said he stopped advertising on AdWords after a few months because he didn't want the additional exposure while on the lam. But the experience became invaluable after he was arrested in 2008 and learned he was facing up to 65 years in prison for the fraud case.

Whitaker recalled getting a tepid response when he described his online pharmacy to federal agents, who were aware of his pill shop.

"Agents don't tend to give you reaction," he said. But by early 2009, he was using undercover websites to see whether Google would allow ads for illicit drugs from abroad.

Whitaker said the first site looked like the handiwork of a Mexican drug lord trading in HGH and steroids. But after a few rejections by Google and some advice from a U.S.-based representative on what revisions to make, Whitaker said the ads went live.

"You have to take the drugs off the site," Whitaker quoted the U.S. representative as saying. "We were fine with it because that meant she knew we were selling drugs."

He said investigators spent about $200,000 on Google ads. Aside from ad spending, Whitaker said Google representatives in the U.S. and Mexico were enticed by his claim that he represented a Mexican hotel chain that wanted to advertise.

In total, Whitaker put in about 1,100 hours working over four months on the sting. He was sentenced in December to nearly six years for the fraud charges and faces a Massachusetts case that hasn't been settled, Balliro said.

FOLLOW HUFFPOST CANADA BUSINESS

Filed by Christian Cotroneo  | 
 
 
  • Comments
  • 7
  • Pending Comments
  • 0
  • View FAQ
Comments are closed for this entry
View All
Favorites
Recency  | 
Popularity
HUFFPOST SUPER USER
MoreFreedom
02:19 PM on 02/24/2012
The government has committed at least four crimes here (well, not technically crimes, but I'd say abuse of our right to contract and decide for ourselves what we want to buy and from whom):

1. The government prohibits consumers from buying prescription drugs (approved for use in the US) from other countries (i.e. creating an oligolopy for the pharmaceuticals here, and essentially forcing us to subsidize drugs in other countries)
2. It prohibits consumers from purchasing drugs that the FDA hasn't approved here but are allowed to be bought and sold in foreign countries
3. Law enforcement hired a criminal - do we really want criminals as our police?
4. A convicted criminal was allowed to reduce their sentence, by setting up others, i.e., the government is encouraging criminal activity

Really, why should the FDA have the power to prohibit the use of drugs (the law could be written to allow then to provide a seal of approval for drugs, like the UL seal for electrical appliances). The reason is an unholy alliance between big pharma and government.

Secondly, how is anyone harmed by their purchase of drugs from a seller in a foreign country (assuming it's a legitimate pharmacy selling legitimate medications)?

Finally, it just goes to show that government likes to prosecute victimless crimes, and they need to setup their targets to do so. Otherwise, no one would complain, except Big Pharma who'd complain about competition.
01:59 AM on 02/02/2012
Ok.. so let me get this straight.. This guy sold snake oil on the internet, making millions of dollars. Then after he gets arrested, he works for the FBI, showing them that Google accepts adds from Canadain pharmacies... So now its harder for people to get reasonably priced drugs from Canada.
What a swell guy.
photo
HUFFPOST SUPER USER
greenmonk
The Only Thing We Have to Fear Is Fear Itself
04:23 PM on 02/02/2012
That's the way I took it.
It seems more like the US pharmaceutical lobby pressured the government to stop Americans from cross-border shopping in Canada where we have lower drug prices due to a more socialized medicare system in which we can negotiate prices as a larger group.

Allowing it to continue embarrasses these companies, and exposes their price-gouging to American citizens. I would guess that a very small minority of those they shut down actually invest in the equipment to produce fake pills etc... Why go to all that trouble when all you have to do is sell legit drugs at a markup?
12:04 AM on 02/02/2012
While the article was generally well written the author seems to have failed basic geography in school. Canada isn't overseas. It's north of the border.
10:21 AM on 02/02/2012
shhhh, you're letting facts get in the way.........
photo
HUFFPOST SUPER USER
JackHoffman
Pundit
09:25 PM on 02/01/2012
Gringos are el stupido.
08:05 PM on 02/01/2012
If the government would take on the pharmaeuticals and force them to market drugs at a reasonable price there would be a lot fewer people interested in buying them.