Numerous new legal complaints by veterinarians against the pet products broker WTF Wholesale Suppliers Corp. accuse the company principal, Todd Stefaniak, of swindling suppliers to raise capital for a new company, True Lines Distributing Co., that engages in the same business.

Stefaniak denies the charges, which are contained in 12 of at least 18 suits filed by veterinarians this year in Circuit Court of Volusia County in Florida.

In court documents, the company acknowledges it owes money to veterinarians but denies that it deliberately defrauded them. Defense attorney Kelly Parsons told the VIN News Service in August that financial problems due in part to the poor economy were behind the unpaid debts and caused the company to close its doors on Aug. 19.

The majority of plaintiffs, represented by attorney Jake Kaney of Ormond Beach, Fla., allege that “WTF is or was a company involved in actively stealing from veterinarians to further company profit. WTF, owned and run by Stefaniak, lures veterinarians into ordering flea and tick products, and other products, from Merial, Novartis and Bayer, among others, to resell to WTF for a percentage payment above invoice, but then does not pay.”

The suits have opened a view into the covert world of veterinary-product diversion, the practice of selling into retail channels products that manufacturers say should be sold to pet owners only by licensed veterinarians with valid veterinarian-client-patient relationships.

Where diversion involves non-prescription products such as Frontline, a leading brand of flea- and tick-killing topical treatment for cats and dogs, resale by veterinarians to retail brokers is not illegal in most states. However, the practice is controversial. It's considered unethical by the veterinary community and may, in some states, result in disciplinary action by veterinary licensing boards.

According to the suits represented by the lawyer Kaney, thousands of veterinarians have been reselling product to WTF. In an interview, Kaney said the figure is derived in part from research by a private investigator hired by some of the affected veterinarians.

Volusia County Circuit Court records show that at least 18 veterinarians across the country have filed claims against WTF this year. In so doing, they publicly acknowledge having engaged in diversion.

In interviews, some of the plaintiffs shrugged off the ethics question. Others said they once believed the practice was wrong, but that it has become so widespread — as demonstrated by the availability of Frontline and other pet parasiticides at retail chains such as Wal-Mart, Target and Costco, online merchants including Amazon.com and PetMed Express and various feed stores — that they figured there was no harm in participating.

“I have always been against Internet sales (of pet medicines and therapies) but it’s not going to go away, and it’s only going to get worse,” said Dr. Jennifer Cowdrey, who owns a clinic with her husband, Dr. Brian Cowdrey, in Ohio. “You can go any number of places and purchase product ...”

Cowdrey said a WTF representative began soliciting her about two years ago. Cowdrey said she refused the offer, but the representative persisted, calling back time and again. “She would explain that this would be a way that I could pay my bills or take a vacation,” Cowdrey recalled. “They told me how any size order would be accepted, from even $500 to $50,000, and I said no.”

But then the agent “hit me on a weak day,” Cowdrey said. “I agreed to it, and I’ve paid ever since for it.”

Cowdrey said she placed only one order for WTF. That was in March. She said she was told she would be paid within 30 days, but the money never came. Her claim against WTF is for $36,039.60, which includes the 5-percent premium the company agreed to pay above her cost for the merchandise.

In Florida, clinic owner Dr. Robert Irelan said he, too, was solicited repeatedly by WTF. He said he ignored their overtures “for a long time.” At the same time, he said, he noticed that Wal-Mart, Target and “everybody” sold Frontline.

Moreover, Irelan said, a state investigator once came to his clinic in response to a complaint from a client who alleged that Irelan had refused to write her a prescription for a pet medication so that she could buy it elsewhere. Irelan said he told the investigator that he regularly provides prescriptions to his clients and did not remember ever refusing to do so.

Irelan noted that despite the veterinary establishment’s stance that diversion is unethical, the community receives a conflicted message. He cited a full-page advertisement by the mail-order pet pharmacy Doctors Foster & Smith in a recent edition of the Journal of the American Veterinary Medical Association.

In deciding to work with WTF, Irelan acted on his conclusion that since everybody else is making a profit on Frontline, he might as well, too.

But instead of profiting, he lost money. Irelan said WTF failed to pay the $30,186 it owed him on his very first shipment.

His contact at the company suggested a bit of finagling to pay him at least some of the money owed, he said: Irelan was directed to send a second shipment of about $30,000 worth of Frontline Plus, for which he was prepaid about $40,000.

“If I hadn’t sent them the second order, I could have kept that and been paid a little over,” Irelan said ruefully. “But I wanted to be an honest businessman.”

To date, according to his suit, WTF still owes him $20,186.

Some veterinarians did business with WTF for several years before running into problems with nonpayment.

Dr. Beverly Hickman, a practitioner in Georgia, said she began selling Frontline Plus to WTF about five years ago. The company initially paid her a 10-percent commission and was so dependable and easy to work with that she even vouched for WTF with veterinarians who were considering whether to participate.

“I feel terribly bad because I did give references, thinking they were on the up-and-up,” Hickman said.

Over time, she said, the commission shrunk and the time lag between shipment and payment grew. Still, she found the money too easy to forgo.

“If you think about it, you are getting paid 10 percent to get, say, $35,000 worth of product. That’s $3,500 for making one phone call (to place the order) and putting (shipping) labels on packages,” she said. “It’s extremely hard money to pass up...”

Hickman said she regarded the practice as acceptable because she was dealing in non-prescription pet treatments. In fact, Frontline Plus and similar products are not classified as medicine by the U.S. Food and Drug Administration, but are considered pesticides by the U.S. Environmental Protection Agency.

But her experience with WTF deteriorated to the point that she is now owed $28,970.40, according to her legal complaint.

Hickman’s suit and 11 others represented by Kaney charge that WTF’s failure to pay was not a symptom of the company’s poor financial health but a calculated scheme to defraud:

“WTF and its principal Stefaniak ordered expensive veterinary medicines and supplies from thousands of veterinarians across the country with the representation that they would pay the veterinarians their cost plus a percentage, all the while knowing that they were not going to pay. In fact, WTF and Stefaniak received the products, resold them and kept the proceeds without paying for them. Stefaniak then started doing business under the unregistered name of True Lines Distributing in the same place of business/building, with the same people and with the same phone and with the money he stole from thousands of veterinarians. They are engaged in the same business. Defendants are engaged in a Ponzi scheme.”

Through court documents, the company and Stefaniak deny the charges but do not elaborate. In the interview by email with the VIN News Service in August, WTF defense attorney Parsons said she did not know anything about True Lines Distributing. She did not respond to subsequent queries about the relationship between the companies.

Evidence suggests the companies are connected. A call by the VIN News Service to True Lines Distributing was answered by a former WTF employee. Also, a veterinarian who purchased Frontline Plus for WTF before the company closed told the VIN News Service that WTF contacts advised that the shipments be transferred to True Lines.

Unlike WTF, True Lines is not registered as a corporation in Florida. Its website indicates that it conducts business out of Atlanta, Orlando and Los Angeles. Records at the departments of state in Georgia and California show the company is not registered as a corporation in those states, either.

Several weeks ago, the website listed a location in Charlotte, as well — presumably, Charlotte, N.C. A VIN News Service query to the business licensing department in Mecklenburg County led to an inquiry by the county into the nature of True Lines’ business.

Julie Berger, deputy director of the Mecklenburg County Office of the Tax Collector, said she learned that True Lines was not operating in the Charlotte area. “They stated they had planned to do business in Charlotte when the website was created, but had not been able to do that,” Berger said in an email."...They have informed us that they will remove Charlotte from their website." The reference subsequently was removed.

Among the complaints filed against WTF by veterinarians this year, at least two have been settled with full or partial payments.

Court records show that Dr. G. David Wolf of Colorado settled with WTF on May 31 with an agreement that WTF would pay him in two installments the full $39,371.60 in his claim. Wolf’s attorney Jeffrey Needle of Fort Lauderdale confirmed that the payments had been made.

Dr. Robert Ketter of Iowa, also represented by Needle, accepted a settlement of $5,500 on his claim of $24,555. After his legal fees, Ketter estimated, he netted about $850 “ahead of where I was if I hadn’t done anything” about the debt.

The 80-year-old retiree wasn’t complaining. “(It’s) better than a poke in the eye with a stick,” he said cheerfully. Unlike many of the other veterinarians involved, Ketter suggested that the financial loss was, for him, not a major hardship. “It’s not the end of the world,” he said.

Plaintiffs won by default in two other cases. One was a claim for $25,148 brought by Dr. David Anders Kulhavy of Texas. Kulhavy’s lawyer, R. Brooks Casey of New Smyrna Beach, Fla., told the VIN News Service today that payment has not yet been received.

The second case involved a claim for $22,995.60 by Royer Veterinary Services of Indiana. The VIN News Service was unable to reach clinic owner Dr. Scott Royer or his attorney, James Rose of Daytona Beach, Fla., to ascertain whether the judgment was paid.