Peter Sheridan Moldenhauer of Missoula, Mont., learned
that lesson in 2011 when he offered to sell two undercover offi- cers a sheet of white paper that he said contained LSD for US$20. The officers had received a tip that Moldenhauer, who had recently been released from prison on another charge, was attempting to trade LSD for other drugs. When he was arrested, police discovered the LSD was fake. Moldenhauer was charged with criminal possession of an
imitation dangerous drug and criminal fraud and ultimately received an 84-month sentence. There can be a mitigating factor in a fake-drug fraud charge,
however. “A person who lacks knowledge that he is dealing in a fake substance has not committed fraud,” criminaldefense
lawyer.com notes. “So, if you had received a baggie of tablets
The sale of fake illegal drugs is negligible compared with the global traffic in fraudulent pharmaceuticals
from a third party who told you it was OxyContin and then you sold the substance as OxyContin to another person, you would not be guilty of fraud or of selling a counterfeit drug with the intent to mislead or defraud another.” While it might seem that little real harm is caused by selling
benign products to those willing to break the law under the belief they’re obtaining illegal substances, the problem of fake drug sales can actually be far more serious. Too oſten, the fake drug is anything but harmless. In 2013, the deaths of six young people in Florida and at least
three in suburban Chicago were attributed to a fake version of the popular club drug ecstasy, ABC News reported. “In Florida, the fake ecstasy, called PMA or paramethoxyamphetamine, and PMMA, or paramethoxymethamphetamine, is killing young people by raising their body temperatures to as high as 108 degrees.” In June 2016, two teenagers died in separate incidents aſter
taking fake ecstasy at the T in the Park Festival in Scotland. The paramethoxyamphetamine pills, which are green and have the prestigious Rolex symbol on them, have been associated with a slew of deaths in recent years, mostly of young people attend- ing music concerts. The sale of fake illegal drugs, however, is negligible com- pared with the global traffic in fraudulent pharmaceuticals,
a problem that Newsweek said was “exploding” in a September 2015 report. The magazine cited a 2013 case in India in which 8,000 people died over a five-year period in a remote Hima- layan hospital “because an antibiotic used to prevent infection aſter surgery had no active ingredient.” Two years earlier,
worldfinance.com had noted, “With 800
illegal products circulating the global market with a value of close to US$200 billion, counterfeit drugs are costing both the pharmaceutical industry billions and the people who take them their health.” As the likelihood increases that marijuana will soon be legal-
ized in Canada (28 US states have legalized its use in some form), it is also likely that a black market will continue to exist, one that includes the sale of what’s known as synthetic mari- juana. It can oſten be found in so-called head shops, where it’s sold as incense and for consumption. “Synthetic cannabinoids refer to a growing number of man-
made mind-altering chemicals that are either sprayed on dried, shredded plant material so they can be smoked (herbal incense) or sold as liquids to be vaporized and inhaled in e-cig- arettes and other devices (liquid incense),” according to the US National Institute on Drug Abuse. “These chemicals are called cannabinoids because they are related to chemicals found in the marijuana plant. Because of this similarity, synthetic can- nabinoids are sometimes misleadingly called ‘synthetic mari- juana’ and they are oſten marketed as safe, legal alternatives to that drug. In fact, they may affect the brain much more pow- erfully than marijuana; their actual effects can be unpredict- able and, in some cases, severe or even life threatening.” The CBC reported last year that an Edmonton woman suf-
fered severe psychological problems after smoking some synthetic marijuana. A primary concern, according to Alan Hudson, an associate professor of pharmacology at the University of Alberta, is the lack of knowledge of the side-effects caused by the various chemicals in the drug. “What is known, Hudson said, is that the drugs are many times more powerful than natural cannabis and can cause psychosis in some people,” the CBC reported. “He said there has been a recent increase in people winding up in hospital aſter smoking the drugs.” It’s naive to think that the appetite for drugs will ever go away.
People have been consuming one drug or another since the be- ginning of time. The only logical way to protect users from harm is to control and regulate their sale. That way the fraudsters, from those selling household detergent to those marketing toxic pills, will have a smaller market to traffic in. It’s high time society found a new solution to this pervasive problem.
DAVID MALAMED, CPA, CA•IFA, CPA (ILL.), CCF, CFE, CFI, is a partner in forensic accounting at Grant Thornton LLP in Toronto
MARCH 2017 | CPA MAGAZINE | 57
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