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I-Team Exposes Growing Problem of Internet Drug Sales

POSTED: 1:16 pm PDT June 5, 2009
UPDATED: 12:25 pm PDT June 8, 2009

A self-made millionaire told the I-Team why the black market business of selling drugs online is a growing problem.

"The money was coming in fast and furious," said San Diegan Mark Kolowich, who sold "lifestyle" drugs like Viagra on the Internet for customers across the world.

"I had a very nice penthouse in downtown San Diego; I chartered boats, planes; I collected wine; I collected watches -- so I lived very well," said Kolowich. "I traveled a lot. I lived good."

Kolowich was a pioneer of sorts, creating an Internet drug sales operation. From 1998 to 2004, he sold Viagra and Viagra knockoffs. Kolowich was on track to earn $24 million the year he was arrested.

At first, Kolowich purchased the real drugs from pharmacies in Mexico. Then he started bringing in counterfeit Viagra, called "Vega," from India at an even cheaper price.

"We were selling it for $5," Kolowich said. "I was making it for 36 cents in India."

Real or fake, the drugs made Kolowich wealthy. The license plate on his Porshe read: "Blu Pill," a reference to Viagra's coloring.

"We were making so much money selling Viagra we didn't really have to go into any other drugs," he said.

But the good times stopped, when federal authorities moved in on Kolowich's illegal Internet business. He pleaded guilty and served 37 months in prison.

"You're constantly thinking, 'Boy; am I breaking the law here?'" said Kolowich. "Eventually you feel this big weight off your shoulders when you get arrested; it's like, 'Thank God;' it's finally over."

Kolowich was one of the first big cases the federal government prosecuted for selling drugs online, but he's not the only one to make a fortune peddling pills. A current case in federal court in San Diego is about Affpower Enterprise, an online company headquartered in Costa Rica with credit card operations in Tel Aviv, which had a million customers. In two years, it grossed $126 million in sales.

Doctors were part of Affpower Enterprise's international online pharmaceutical network. Doctors were paid $3 a prescription, sometimes "in excess of a 1,000 orders a day," prescribing drugs like Ambien, Cialis, Prozac, Zoloft and Viagra.

The indictment against Affpower Enterprise shows a number of customers were in San Diego, which is why the case was filed in that city. Two defendants, both doctors, have pleaded guity. The other 16 defendants are in federal court as their case, which is expected to finish up by mid-June, is heard. Since the Affpower Enterprise case is ongoing, federal law enforcement would not comment.

"You don't want to jeopardize your health," said Kaiser pharmacist Jamie Mangham, who warns consumers that when you buy off the Internet, you are taking a chance. "A lot of medications are manufactured in developing countries," she said. "In those countries, up to 30 percent of medications there can be counterfeit."

Kolowich said he tested his drugs, counterfeit or not. He said he never got a complaint from buyers. Still even when he was cranking out hundreds of orders a day, he knew it would end sometime. "All I can tell you is, they're gonna getcha one way or another," Kolowich said, noting how more regulation is needed.

Kolowich said he sold his Web site to someone else in another country where the drug sales are legal.

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