There, the company's investigators found ingredients used to make the fake drinks, which were put into counterfeit bottles and packages for shipment around the country. Investigators believe the ingredients were imported from Mexico.
That raid followed a series of investigations and document seizures that began in retail stores, including CVS drug stores, Valero (VLO) gasoline stations and 7-Eleven shops, and traced their supply chains back to the source of the fake products. In the last month, nearly 100 outside investigators from Kroll, Inc., armed with secret subpoenas authorizing raids to seize documents, computers, illegal manufacturing equipment and counterfeit products, had fanned across the country to trace the supply lines back from retail outlets through middlemen to wholesale warehouses and to the manufacturing facility. They found the product in a majority of the states and at wholesale distributors in California, Florida, Illinois, Michigan, New York, Pennsylvania and Texas.
Accompanied by local law enforcement authorities, the investigators located and raided the manufacturing facility in San Diego, which was unmanned, but contained records leading the investigators to the alleged bosses of the operation.
The court documents say that genuine 5-Hour Energy is made only at two plants in Wabash, Ind.
Potter says that people with distribution operations in California and Michigan are believed to be the masterminds of the scheme. Records seized in the raids show the counterfeiting may have been going on for at least two years. The complaints, charging violations of trademarks and other civil violations, ask for $25 million in damages and recovery of all lost profits, which could be millions of dollars more from dozens of defendants. The fake products allegedly were being sold wholesale for $1.25 to $1.75 a bottle.
The hunt was triggered in late September when the company learned from an independent salesman that he had obtained products from a broker that appeared to be substandard and possibly defective. By examining those product samples, Living Essentials discovered they were counterfeit -- they did not consist of the authorized ingredients, were not the pale pink color of the real products and smelled funny, the filings show. Other customers who had bought fakes also had complained they were getting "no energy" from the drinks they had bought.
Among the differences, according to court documents, the real drink contains 8,333% of the minimum Recommended Daily Intake of vitamin B-12, no sugar, and caffeine roughly equal to the amount in a 12-ounce cup of coffee. The counterfeits had sugar, no B-12, varying amounts of caffeine, and were different colors. While the packaging of the counterfeits closely resembled the real products, some bottles did not contain a dimple on the top of the plastic bottle, which is left by the manufacturing process for the real product.