BREAKING: DOJ fines abortion pill manufacturer Danco nearly one million under False Claims Act

Written by Carole Novielli

The United States Department of Justice (DOJ) has fined abortion pill manufacturer Danco Laboratories for allegedly violating the federal False Claims Act and ordered them to pay nearly one million dollars in restitution.

“The Justice Department announced…that Danco Laboratories, LLC…located in New York, has agreed to pay $765,000 to resolve allegations that it violated the False Claims Act by failing to pay certain customs duties, known as marking duties, on imported pharmaceutical products that lacked markings to identify their country of origin,” the Justice Department’s release dated April 12, 2023 stated. Ironically, the word abortion is not mentioned in the DOJ release.

“The Tariff Act of 1930 requires companies that import foreign products into the United States to mark the country of origin on those products. Importers that fail to mark their products are subject to a 10% ad valorem duty,” the DOJ release added.

According to the DOJ, the False Claims Act (FCA) not only “allows the United States to pursue perpetrators of fraud on its own, the FCA allows private citizens to file suits on behalf of the government (called ‘qui tam‘ suits) against those who have defrauded the government.  Private citizens who successfully bring qui tam actions may receive a portion of the government’s recovery,” they wrote online.

How did the False Claims Act case originate:

The case (Life Legal Defense Foundation v. Danco Laboratories, LLC, et al., Case No. 21-cv0088) against Danco originated as a qui tam lawsuit filed January 29, 2021 by Life Legal Defense Foundation. But, the United States of America acting through the United States Department of Justice and on behalf of United States Customs & Border Patrol of the Department of Homeland Security, is the party seeking the settlement.

The settlement agreement states in part, “Danco is a U.S. pharmaceutical company and is in the business of distributing a single pharmaceutical product—Mifeprex—within the United States. Between January 1, 2010 and December 31, 2019, (the ‘Relevant Period’), Danco manufactured Mifeprex for a period of time in the United States and for a period of time in the European Union. During the Relevant Period, Danco imported the active pharmaceutical ingredient for Mifeprex (mifepristone) from outside the United States into the United States.”

“The qui tam complaint alleged, among other things, that Danco failed to label its imported pharmaceutical product with the country of origin, and should have paid “’marking duties’” as a consequence of these labeling violations. The qui tam complaint did not allege that any of Danco’s pharmaceutical products are defective, unsafe, ineffective, or otherwise violate FDA regulations,” the settlement also stated.

“When an individual or entity fails to properly mark the country of origin, the individual or entity is required to export, destroy, or pay duties for the unmarked articles,” it added.

A press release issued April 17, 2023 by Life Legal Defense states in part, “Life Legal achieved a significant victory in a qui tam action filed against Danco, the pharmaceutical company created specifically to import and distribute Mifeprex, the deadly chemical abortion pill. The lawsuit, brought under the False Claims Act, alleged that Danco knowingly and willfully failed to pay customs duties on the abortifacient drug, imported from China, resulting in significant financial losses to the U.S. government.

“After a thorough investigation, Danco has admitted to its failure to pay the required Customs Duties on the imported pills, which it failed to label with the country of origin. As a result, Danco has agreed to reimburse the government $765,000 under the False Claims Act, which allows whistleblowers to bring lawsuits on behalf of the government and share in any recovery,” LLD stated.

False Claims Act Allegations Against Danco:

“The United States contends that between January 1, 2010 through December 31, 2019, Danco did not mark its pharmaceutical product (Mifeprex) with the country of origin or pay marking duties for these unmarked products, including marking duties for the value of all ‘assists,’ as defined by 19 U.S.C. § 1401a(b)(1)(C), before distributing them to consumers within the United States,” the DOJ document alleged.

“As a consequence of these actions, the United States contends that Danco ‘knowingly conceal[ed] or knowingly and improperly avoid[ed] or decreas[ed] an obligation to pay or transmit money or property to the Government…’ in violation of the False Claims Act,” the settlement document added.

Settlement Terms and Conditions:

The Settlement contends that while Danco has denied specific charges, the Settlement is “neither an admission of liability by Danco nor a concession by the United States that its claims are not well founded.”

It adds that the Parties (including Danco) agree and covenant as follows:

“Danco shall pay to the United States $765,000 (“Settlement Amount”), of which $382,000 is restitution, by electronic funds transfer pursuant to written instructions to be provided by the United States Attorney’s Office for the Eastern District of Texas. Danco shall pay to the United States the Settlement Amount plus interest accrued at the rate of 3.625% per annum, in accordance with the payment schedule attached hereto as Exhibit A. On or before April 24, 2023, Danco shall pay the United States the initial fixed payment in the amount of $255,000 and thereafter make principal payments with interest according to the schedule in Exhibit A. The entire balance of the Settlement Amount, or any portion thereof, plus any interest accrued on the principal as of the date of any prepayment, may be prepaid without penalty.”

The Settlement adds that once the United States receives “the initial fixed payment in the amount of $255,000 from Danco” they will “pay $38,250.00 to Relator [LLD] by electronic funds transfer.”

Additional payments will be made according to the agreement (Exhibit A) seen below.

Abortion pill manufacturer Danco fined by DOJ for violating false claims act

Danco facing additional lawsuits

The DOJ’s allegations against Danco come as the case of Alliance for Hippocratic Medicine (AHM) v. FDA, is being considered before the U.S. Supreme Court. Justice Samuel Alito just temporarily blocked a previous ruling issued by U.S. District Court Judge Matthew J. Kacsmaryk. That decision found in favor of AHM and essentially suspended the 2000 approval and subsequent FDA changes to the abortion pill. But, on April 12, the U.S. Court of Appeals for the Fifth Circuit issued a partial stay in the case, deciding to only uphold the suspension of mail-order abortion pills and safety requirements dated prior to 2016.

As a result, Danco claimed that it would be “irreparably harmed” if the decision goes into effect because it “will be unable to both conduct its business nationwide and comply with its legal obligations.” But upheaval in Danco may have begun long before this case unfolded.

A fascinating report uncovering additional investors of Danco, published by Mother Jones (MJ) only weeks ago claimed “Their windfall has come through a byzantine corporate structure set up in the 1990s by a private equity fund, now called MedApproach Holdings, to allow investors to pour money into Danco Labs…without disclosing their identities. As states have imposed ever-stricter limits on abortion access, their investments have generated hefty returns,” the online group wrote.

Over the years, Danco has managed to hide names of most of their investors, corporate leadership as well as the location where abortion pills are manufactured.

But now, the DOJ Settlement as well as a recent Mother Jone’s piece have identified W. Bradley Daniel as connected to the abortion pill company. Daniel’s name appears in separate litigation as an early Danco investor along with Joseph Pike. The two allegedly invested $13 million in MedApproach, one of the many names tied to the Danco investment scheme.

Other investors (Greg and Sharon Hawkins) appear as plaintiffs in a January 2023 court document, challenging shareholder power of the abortion pill company. According to Mother Jones, the “consequences of the decision are still unfolding.”

The Mother Jones report reveals HUGE PROFITS surrounding the abortion pill.

“[]average return on investment for everyone who invested in Danco about 452% over 23 years” ~ MotherJones wrote.

“All told, Daniel has earned about $10.3 million in fees alone,” they added.

Even more interesting is that – while Danco is claiming potential harm to SCOTUS – the generic abortion pill maker, GenBioPro previously admitted they they “captured a significant share of the nationwide market for mifepristone.”

The FCA settlement against Danco confirmed a previous claim by a Danco spokesperson that the deadly abortion drug was being manufactured in Europe, but the most recent False Claims Act settlement against Danco revealed that the company has also produced abortion pills right here in the United States.

“Danco manufactured Mifeprex for a period of time in the United States and for a period of time in the European Union. During the Relevant Period, Danco imported the active pharmaceutical ingredient for Mifeprex (mifepristone) from outside the United States into the United States.” And, according to Life Legal’s release, those imports came from China.

Danco’s address is in New York, a state unaffected by a preliminary injunction put in place in a competing lawsuit. It was filed by pro-abortion politicians in the state of Washington, where plaintiffs requested the judge remove the abortion pill from the FDA’s REMS safety system.

In that case, U.S. District Judge Thomas O. Rice recently granted a preliminary injunction to bar the FDA from “altering the status quo and rights as it relates to the availability of Mifepristone under the current operative January 2023 Risk Evaluation and Mitigation Strategy under 21 U.S.C. § 355-1 in Plaintiff States.”

This saga continues….

Editor’s note: This post was updated 4/17/2023.