Complaint for Violation of Title 18 U.S.C. § 1341 — United States v. Jennings Ryan Staley, No. 20mj1407 (Dkt. 1, S.D. Cal.)

Summary

This criminal complaint in Case No. 20mj1407 in the Southern District of California charges Jennings Ryan Staley with mail fraud under Title 18 U.S.C. § 1341 for knowingly causing a package containing a "COVID-19 Treatment Pack" to be delivered by mail on or about April 10, 2020. FBI Special Agent Terrence Mycka swore to it by telephone before U.S. Magistrate Judge Jill L. Burkhardt on April 15, 2020. The statement of probable cause says Skinny Beach offered a "COVID-19 Concierge Medicine Pack (Family)" for $3,995.00 that included hydroxychloroquine tablets. An undercover agent of the FBI responded, and Staley agreed to sell the agent six treatment kits for the family price of approximately $4,000. The affidavit also describes a "covid19meds" treatment pack offered for $595.

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Full text

UNITED STATES DISTRICT COURT
1
SOUTHERN DISTRICT OF CALIFORNIA
2
3
4 UNITED STATES OF AMERICA, Case No.: 20mj1407

5 Plaintiff,

6 v. COMPLAINT FOR VIOLATION OF:

7 JENNINGS RYAN STALEY, Title 18 U.S.C. § 1341
Mail fraud (felony)
8 Defendant.

9
10
11 The undersigned complainant being duly sworn states:

12 On or about April 10, 2020, within the Southern District of California, defendant

13 JENNINGS RYAN STALEY, having devised a scheme and artifice to defraud, and for
14 obtaining money or property by means of false and fraudulent pretenses, representations,
15 and promises, for the purpose of executing such scheme, knowingly caused to be
16 delivered by mail a package containing a “COVID-19 Treatment Pack,” in violation of
17 Title 18, United States Code, Section 1341.
18 The complainant states that this complaint is based on the attached Statement of

19 Facts incorporated herein by reference.
20
21 ________________________
Special Agent Terrence Mycka
22 Federal Bureau of Investigation
23
Sworn and attested to under oath by telephone, in accordance with Federal Rule of
24
Criminal Procedure 4.1, this 15th day of April, 2020.
25
________________________
___________
26 THE HON. JILL L. BURKHARDT
27 U.S. MAGISTRATE JUDGE
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STATEMENT OF PROBABLE CAUSE
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I, Terrence Mycka, being duly sworn, hereby depose and state as follows:
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4 A. COVID-19 and anti-malarial drugs hydroxychloroquine and chloroquine

5 1. According to the web site for the World Health Organization (“WHO”),

6 COVID-19 is an infectious disease caused by a newly discovered coronavirus. This new
7 virus was unknown before the outbreak began in Wuhan, China, in December 2019. The
8 most common symptoms of COVID-19 are fever, tiredness, and dry cough, although
9 around 1 out of every 6 people who gets COVID-19 becomes seriously ill and develops
10 difficulty breathing. On March 11, 2020, the WHO recognized the outbreak as a
11 “pandemic.” As of April 5, 2020, the WHO’s web site reported over 1.1 million cases
12 worldwide, with over 60,000 deaths. The web site stated, “At this time, there are no specific
13 vaccines or treatments for COVID-19. However, there are many ongoing clinical trials
14 evaluating potential treatments.”
15 2. According to the web site of the Centers for Disease Control and Prevention

16 (“CDC”), on a page entitled “Information for Clinicians on Therapeutic Options for
17 COVID-19 Patients,” (updated April 7, 2020) “[t]here are no drugs or other therapeutics
18 approved by the US Food and Drug Administration to prevent or treat COVID-19.” The
19 page also addresses two drugs, hydroxychloroquine and chloroquine, which are “oral
20 prescription drugs that have been used for treatment of malaria and certain inflammatory
21 conditions. Hydroxychloroquine and chloroquine are under investigation in clinical trials
22 for pre-exposure or post-exposure prophylaxis of SARS-CoV-2 infection, and treatment of
23 patients with mild, moderate, and severe COVID-19.”
24 3. In a letter dated March 28, 2020, the FDA noted that “[c]hloroquine phosphate
25 and hydroxychloroquine sulfate are not FDA-approved for treatment of COVID-19.” The
26 letter encouraged the conduct of clinical trials to determine the effectiveness of these drugs
27 in treating COVID-19. However, the FDA letter determined that “[b]ased on the totality of
28 scientific evidence available to FDA, it is reasonable to believe that chloroquine phosphate
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and hydroxychloroquine sulfate may be effective in treating COVID-19,” and that
1
circumstances warranted the emergency approval of the drugs. Accordingly, the FDA letter
2
authorized “the emergency use of chloroquine phosphate and hydroxychloroquine sulfate,
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4 . . . when clinical trials are not available, or participation is not feasible,” subject to the
5 specific terms of the authorization letter. These terms included requirements that the
6 medications be distributed from the Strategic National Stockpile to public health
7 authorities, and that they “may only be used to treat adult and adolescent patients who
8 weigh 50 kg or more hospitalized with COVID-19 for whom a clinical trial is not available,
9 or participation is not feasible.”
10 B. Skinny Beach offers hydroxychloroquine to healthy people

11 4. Skinny Beach Med Spa (“Skinny Beach”) is a business based in San Diego,

12 California. On a recent visit, the web site for Skinny Beach, skinnybeach.com, stated,
13 “Welcome to Skinny Beach, where you will enjoy access to world-class beauty innovations
14 at affordable prices.” It advertises services such as weight loss programs, hyperbaric
15 oxygen therapy, botox, tattoo removal, hair removal, and fat transfer. The web site lists an
16 address of 4645 Carmel Mountain Road, Suite #208, in San Diego, as well as addresses in
17 Del Mar and San Juan Capistrano.
18 5. On Monday, March 30, ABC 10 News San Diego ran a story on Skinny

19 Beach, with the title, “Accusations of ‘unethical’ COVID-19 treatment at Carmel Valley
20 medical spa.” The piece reported that Skinny Beach and its operator, Dr. Jennings Staley,
21 were offering COVID-19 “family resistance packs” for approximately $4,000. The piece
22 included on-camera statements by Dr. Staley, who complained that he had received death
23 threats. Staley added, “I knew it would be a little bit controversial because there was the
24 controversy around the fact that hydroxychloroquine wasn’t approved until Sunday night
25 but I didn't think people would be so angry.”
26 6. On March 27, 2020, Skinny Beach sent an e-mail from
27 hello@skinnybeach.com to its mailing list advertising COVID-19 treatment packs. The e-
28 mail from Skinny Beach included a link to a third-party website at the bottom of the
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message that said, “CLICK HERE TO PURCHASE COVID-19 TREATMENT PACKS.”
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Screen shots taken from the third-party web site, go.booker.com, on March 28, 2020,
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describe Skinny Beach’s offer of a “COVID-19 Concierge Medicine Pack (Family)” for
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4 $3,995.00:
5 Dr. Staley is offering a concierge medicine experience for the next 30 days to a few
clients who desire guidance and medical management during these times.
6 The concierge medical package is available on a limited basis and will include:
7 - at home and in-store intravenous Drips
- Exclusive access to medical hyperbaric oxygen chamber at separate rates
8 - COVID-19 Updates and 24/7 access to Dr. Staley and his team to answer your
9 questions and help you through this time
- Anti-anxiety treatments to help you avoid panic if needed and help you sleep
10 - Hydroxychloroquine and Azithromycin for you and all members of your family.
11 Choose to keep your meds at home or safely held in our office with YOUR NAME
ON IT. Each individual needs a prescription.
12 - COVID-19 ELISA testing IgC and IgM to determine if you are infected currently
13 or previously
- If you experience respiratory distress you will be sent via EMS to a local ED. Dr.
14 Staley will notify the ED as to your status and health info
15 Dr. Staley will see each patient via telemedicine to perform a risk assessment
and intake evaluation.
16 If anyone develops symptoms such as fever and body aches, you will be
17 immediately evaluated by telemedicine and followed closely to determine need to
activate your treatment kit. We will follow the clinical guidelines set forth by
18 Harvard Medical School and the CDC.
19 Includes: Hydroxychloroquine 200mg x 5[,] Azithromycin 250mg x 5[,]
Vitamin C 500mg x 30[,] Zinc 220mg x 30
20
21 7. From the foregoing, it appears that Skinny Beach was offering to sell, as part

22 of its “COVID-19 Concierge Medicine Pack (Family)” for $3,995.00, 200 mg tablets
23 (apparently 20 tablets in total for a family of four) of anti-malarial hydroxychloroquine to
24 anyone willing to buy them, and that Dr. Staley would instruct the customer when to
25 “activate” the medications by taking them. The offer also included, without further
26 specification, “[a]nti-anxiety treatments to help you avoid panic if needed and help you
27 sleep.”
28 C. An Undercover Agent Responds to Skinny Beach’s Offer
4
8. An undercover agent (“UC”) of the FBI responded by email to Skinny Beach’s
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offer. The UC stated that he had a wife and three children, that his father would be coming
2
to live with the family, and that he wanted to learn more about purchasing six COVID-19
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4 treatment packs.
5 9. On Friday, April 3, 2020, the UC received a call from Dr. Staley, who said
1
6 that he was calling about his “COVID-19 management program.” Staley explained how
7 the offer worked. After purchasing a “COVID-19 treatment kit,” the patient can either pick
8 it up, or have it mailed to him or her. In the event someone in the household “gets sick,”
9 Staley will “activate” the kit, meaning he will tell the household how much of their
10 medications to take. “I will be dosing it. I will activate it. You will own and possess these
11 kits.” Staley explained that the medication would be taken not only by the sick person, but
12 also by everyone else in the household, to protect them from getting the virus (i.e., to
13 “prophylax” them). “When someone gets sick, we will start the loading on that person. We
14 will load them and prophylax all of you.”
15 10. On the call, Staley said that he was selling anti-malarial medication that “cures

16 the disease,” identifying the medication as hydroxychloroquine. “It’s incredible. There’s
17 never been before, except for hepatitis C, in the history of medicine been a situation where
18 a medication is completely curative of a virus.” Staley explained that “you could be short
19 of breath and coughing at noon today, and if I start your hydroxychloroquine loading dose,
20 you’ll feel 99% better by noon tomorrow.” He described it as an “amazing cure” and a
21 “miracle cure” that was “perfectly engineered.” Staley also discussed another anti-malarial
22 – mefloquine – that he would sell the UC if he ran out of hydroxychloroquine. When asked
23 if either medication will cure the disease, Staley responded, “100%.” He added that both
24 medications will also prevent you from getting COVID-19: “you’re immune for at least 6
25 weeks.” Staley referred to the medication he offered as a “magic bullet.” “It’s preventative
26 and curative. It’s hard to believe, it’s almost too good to be true. But it’s a remarkable
27
1
Quotes from recordings in this affidavit are based on my review of the recordings
28 and are approximate.
5
clinical phenomenon.” Staley also stated, “I’ve never seen anything like this in medicine,
1
just so you know. Really, I can’t think of anything. That, you’ve got a disease that literally
2
disappears in hours.”
3
4 11. Staley claimed that he “got the last tank of hydroxychloroquine smuggled out

5 of China on Sunday night.” He said that “the broker smuggled it out,” and “tricked
6 customs” by saying that it was “sweet potato extract.” He said that the drug was coming in
7 the form of a crystalline powder weighing eight kilograms, that would constitute 8,000
8 doses, and that needed to be made into gelatin capsules. He said he had received a DHL
9 shipping notice and that he expected the package to arrive later that day.
10 12. Staley also described obtaining hydroxychloroquine from Teva

11 Pharmaceuticals, and said he had the medication in his office and the UC could pick it up.
12 He claimed that he had been mailing out kits all day, and stated that he had only six kits
13 remaining at the moment; but later added that he expected another shipment of “180” the
14 following day. Staley said he had a buyer coming from Scottsdale, Arizona that afternoon;
15 and that Staley would potentially be selling the hydroxychloroquine powder to the
16 government of the United Kingdom.
17 13. Staley told the UC that the UC’s earlier contact by email had been with

18 Staley’s wife. Staley also mentioned he had a $10,000 investor. And during the call, which
19 was on speaker phone, a third individual identified as “Mike” also spoke. Staley explained
20 that Mike is an assistant at Skinny Beach who runs the hyperbaric oxygen equipment.
21 14. At one point in the call, the UC asked, “If I’m hearing you right, if I buy these

22 kits from you, then that’s going to pretty much guarantee that neither my kids, my dad, my
23 wife, any of us get sick, and if we are, it’s going to cure us, right?” Staley responded,
24 “Guaranteed.” He then qualified his answer, saying, “Now, there’s always exceptions, your
25 dad could come here and die of a heart attack.” Later in the call, when the UC used the
26 word “guarantee” again, Staley responded, “A little red flag goes off when I hear the word
27 guarantee. . . . There are no guarantees in life. There are no guarantees of anything.” During
28
6
the call, Staley repeatedly invited the UC to “google” one topic or another to substantiate
1
Staley’s claims, and made reference to several scientific or medical studies.
2
15. At the end of the call, Staley agreed to sell the UC six treatment kits for the
3
4 family price of approximately $4,000. He also stated that each person would get their own
5 “hydroxychloroquine Z-pack kit,” with their name on it, and added, “you can sell it on
6 eBay for 2500 a pop.”
7 D. Dr. Staley offers the UC a controlled substance

8 16. On Monday, April 6, the UC spoke by telephone again to Dr. Staley. Staley

9 said he had set aside four portions of hydroxychloroquine, and two portions of chloroquine.
10 He added that he had just received an additional delivery of hydroxychloroquine “from Del
11 Mar.” Staley provided the UC with the phone number for Staley’s wife, Amanda, to arrange
12 for payment.
13 17. During the discussion, Staley volunteered: “Did you need Viagra, Xanax … I

14 have IV fluids if you have a nurse in the house. We ship you that.” The UC responded,
15 laughing, “Yeah, I mean, who doesn’t need those things.” Staley added, “It comes with
16 your concierge package so if you want a bottle of the Viagra 100mg as long as you don’t
17 have any nitrates or coronary artery disease. Do you want a bottle of the 100mg Viagra?”
18 The UC responded affirmatively. Staley then asked, “And then you need any Xanax?” The
19 UC responded, “Yeah, why not?” Staley then said, “OK, just take half a tab. It helps you
20 sleep, and there’s a lot of panic going on right now. So just tell Amanda that you got those
21 too, that it’s courtesy, that she gets your date of birth and everything, so I can put it into
22 the pharmaceutical record.”
23 18. Xanax is the brand name for the drug alprazolam, a type of benzodiazepine,

24 and a Category IV Controlled Substance under the Controlled Substances Act. Staley’s
25 offer of the drug to the UC as part of the “concierge package,” along with Staley’s online
26 marketing of “anti-anxiety treatments” as part of the package, suggests that Staley is
27 routinely distributing this controlled substance without any sort of medical examination or
28 demonstration of need.
7
19. The Controlled Substances Act, 21 U.S.C. § 841(a)(1), provides that “[e]xcept
1
as authorized by this subchapter, it shall be unlawful for any person knowingly or
2
intentionally . . . to . . . distribute . . . a controlled substance.” Another portion of the CSA
3
4 provides that every person who distributes a controlled substance “shall obtain annually a
5 registration issued by the Attorney General in according with the rules and regulations
6 promulgated by him.” 21 U.S.C. § 822(a). Relevant regulations provide that “[a]
7 prescription for a controlled substance to be effective must be issued for a legitimate
8 medical purpose by an individual practitioner acting in the usual course of his
9 professional practice.” 21 C.F.R. § 1306.04(a) (emphasis added). Likewise, the
10 regulations permit “[a]n individual practitioner” to “dispense directly a controlled
11 substance” listed in Schedule IV without a prescription “in the course of his/her
12 professional practice.” 21 C.F.R. § 1306.21(b) (emphasis added). Whether or not a
13 prescription is issued, these regulations do not grant authorization to physicians to
14 distribute controlled substances as Staley did here, without any medical examination
15 whatsoever.
16 20. Additionally, another section of the CSA expressly provides that no controlled

17 substance that is a prescription drug may be “delivered, distributed, or dispensed by means
18 of the Internet without a valid prescription,” 21 U.S.C. § 829(e), and the CSA defines this
19 phrase to refer “to any delivery, distribution, or dispensing of a controlled substance that
20 is caused or facilitated by means of the Internet.” 21 U.S.C. § 802(51). Distribution of a
21 controlled substance in violation of Section 829 is also a criminal offense if done
22 knowingly. 21 U.S.C. § 842(a)(1), (c)(2)(A).
23 E. Staley and his wife ship drugs to the UC
24 21. Later in the afternoon on April 6, the UC called the number provided by
25 Staley, and spoke to “Amanda.” She took his credit card number and a mailing address,
26 and when the UC mentioned the Viagra and Xanax, she said, “OK, I’ll remind him, I’ll put
27 it in the notes. He’ll be the one doing it.”
28
8
22. FBI received the requested medication on Thursday, April 9, 2020. As
1
depicted below, the shipment included azithromycin tablets in a box; generic Xanax and
2
Viagra in bottles; hydroxychloroquine in small brown envelopes; and chloroquine in small,
3
4 clear plastic bags:
5
6
7
8
9
10
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21 23. Also included, as shown above, was a “fact sheet for patients and

22 patient/caregivers” for emergency use authorization of chloroquine to treat COVID-19,
23 issued by the FDA; and some Skinny Beach business cards.
24 F. FBI interviews Dr. Staley, and he makes false statements
25 24. On Friday, April 10, 2020, another agent and I conducted an interview of Dr.

26 Staley at Skinny Beach. I advised Staley at the outset that the interview was entirely
27 voluntary. During the interview, I also advised Staley that it was a crime to lie to a federal
28 agent.
9
25. During the interview, Staley touted the effects of hydroxychloroquine in
1
treating COVID-19. I asked him whether he was communicating to patients that the drug
2
“is a cure, is 100% curative?” Staley replied, “No, I would be careful not to say that. You
3
4 know, you could put something like that in quotes if someone else called it that, possibly.
5 But I – If we ever said that it’s a cure that would’ve been a mistake. Because you don’t
6 know that they have COVID-19. We don’t know – It’s not definitive that it cures it, right?
7 We don’t know enough about the spectrum of the disease.” Staley added, “We know it
8 works,” but that a study should be done to determine, “at what stage of the disease would
9 it work is more important, and what’s the minimum effective dose?” Staley was again
10 asked whether Skinny Beach has told potential clients that the treatments are a “100%
11 effective cure” for COVID-19. Staley said, “No, that would be foolish. We would never
12 say anything like that.” As demonstrated by Staley’s sales pitch to the UC, his statements
13 to me were false.
14 26. Also during the interview, Staley said that he had purchased 12 kilograms of

15 hydroxychloroquine from a major pharmaceutical supplier in China, and that he expected
16 the package to arrive by DHL air the next Monday (i.e., April 20, 2020). Staley said he
17 also has an additional 35 kilograms of hydroxychloroquine on order from two other
18 pharmaceutical manufacturers in China. He said his goal is to obtain 300 kilograms of
19 hydroxychloroquine, which will make 150,000 kits. Staley said he plans to distribute kits
20 through his new business, covid19medkits.com. He described importation of the drug as
21 “perfectly legal,” and said that “it goes through customs.” He later stated that when it comes
22 to ordering “non-narcotic meds and vitamins and stuff” from China, it gets through
23 customs, and “we don’t have to mislabel it or anything.” As evidenced by Staley’s
24 statements to the UC that he had hydroxychloroquine smuggled out of China, his
25 statements to me were false.
26 27. During the interview, Staley said that 80% of the patients that have come in
27 to Skinny Beach concerning COVID-19 have had acute panic disorder. Staley purchases
28 Xanax from a medical supplier and does “in-office” dispensing of the drug. As part of the
10
COVID-19 treatment packs, Staley has prepared five-pack alprazolam, or Xanax,
1
“baggies” that he will prescribe if patients say they have anxiety and are panicking. Staley
2
explained that he does a CURES database check to make sure the patient is not doctor
3
4 shopping and the patient must have no rehab or drug abuse history. Staley said that he has
5 not sent out any five-pack baggies yet, “just a couple bottles of, the, umm, home delivery
6 where I went there and I had these meds with me in my go kit, and if they’re seeming really
7 hysterical or someone is,” Staley asks if they need some help with sleep. Staley instructs
8 the patient to break the Xanax tab, which is 1 mg, in half. Patients are so happy because
9 for about 12 hours, the Xanax dulls the panic. As demonstrated in Staley’s interactions
10 with the UC, Staley did not conduct a home visit with the UC.
11 28. During the interview, Staley offered that he would “take everything down” if

12 asked; asked whether what he was doing was illegal; and said that “my lawyer says it’s
13 fine.”
14 G. Dr. Staley offers hydroxychloroquine for sale on a new web site

15 29. On April 13, 2020, I visited the web site “covid19medkits.com.” The “Contact

16 Us” page provides, as a business address, the San Diego address for Skinny Beach. The
17 home page advertises, “protect yourself with hydroxychloroquine and Z-Pack, available by
18 online prescription, shipped to your door.” The web page offers a “hydroxychloroquine +
19 azithromycin COVI-19 treatment kit” for $595. The text of the offer reads: “Protect
20 yourself against COVID-19 with our exclusive med kits. Each kit contains the two
21 medications which are showing great success on the frontlines against COVID-19:
22 HYDROXYCHLOROQUINE and AZITHROMYCIN. Kits are shipped to you after
23 establishment of a patient-doctor relationship with a healthcare provider from
24 COVID19MEDKITS.COM. Each patient will be evaluated by our medical director online
25 and you will be assigned a risk assessment for complications of COVID-19 which will help
26 us treat you at home with the treatment protocol or, if indicated, protect you from
2
27 developing the disease with the prevention protocol.” It therefore appears that the
28 2
A further narrative states, “A French study cited by Trump showed 70% of
11
“covid19meds” treatment pack, being offered for $595, is a subset of the larger treatment
1
package that was offered by Skinny Beach, focusing on hydroxychloroquine and
2
azithromycin.
3
4 H. CBP records show Dr. Staley importing purported “yam extract”

5 30. According to records accessed by U.S. Customs and Border Protection

6 (“CBP”), a package is being shipped via the carrier DHL from mainland China, destined
7 for Skinny Beach at its San Diego address, with Dr. Staley listed as the point of contact.
8 The package was shipped on April 13, 2020, with an estimated delivery date of April 20,
9 2020. The contents of the package are described as “yam extract.” These records are
10 consistent with Staley’s statement to the UC that he was smuggling in from China
11 powdered hydroxychloroquine, falsely describing the drug as “yam extract.”
12 I. Conclusion

13 31. As set forth above, Staley devised a scheme to defraud, and to obtain money

14 by means of false and fraudulent pretenses, representations, and promises regarding the
15 curative and preventative efficacy of his COVID-19 treatments; and for the purpose of
16 executing such scheme, on or about April 10, 2020 within the Southern District of
17 California knowingly caused to be delivered by mail a package containing a “COVID-19
18 Treatment Pack,” in violation of Title 18, United States Code, Section 1341.
19
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27 the hydroxychloroquine treated patients tested negative for the COVID-19 virus, compared
with 12.5% in the control group, while all of those who had received hydroxychloroquine
28 plus azithromycin (6 patients) cleared the virus by this time.”
12

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