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Stem Cells Fraud Scheme in U.S. Leads to Arrests

It then alleges that Morales falsely represented to the public that he was a physician licensed to practice medicine in the United States and provided medical advice to individuals regarding the benefits of stem cell treatments. Morales also falsely represented that he operated a medical clinic in Brownsville, Texas, according to the indictment, to convince the public that he specialized in using stem cells to treat incurable diseases. He would then take patients across the border into Mexico to perform the stem cell procedures, the indictment says.

Stowe allegedly ran the companies that marketed and sold the stem cells and other biological products.

The four are facing 39 counts including conspiracy, mail fraud and illegally manufacturing, distributing and selling stem cells and related procedures. Dammai, who has worked at the University of South Carolina since 2001, has been placed on administrative leave pending resolution of the matter.

The group had earlier been the target of a 2010 investigative report by 60 Minutes, a weekly news show that airs on U.S. television. On January 8 of this year, 60 Minutes aired a report on another stem cell fraud scheme, this time centered on physician Dan Ecklund, who lives in Alabama but is listed as the lab director and president of Ecuador-based Stem Tech Labs. Stem Tech's website claims it can treat more than 70 diseases using stem cells at a price beginning at $US 2,500. The site also encourages donations to Stem Tech, which it says will be used for its research and production operations.

In this 60 Minutes report, Ecklund, whose medical license was revoked in 2005, told the family of a child suffering from cerebral palsy that he could treat their son with a series of four stem cell injections at a cost of $US 20,000 after examining him via teleconference. What he didn't know was that the family was part of the 60 Minutes investigation. Ecklund agreed to meet the family at a Florida hotel and administer the treatments there, according to the 60 Minutes report. (Ecklund disputes this.) When Ecklund showed up, the family left and a 60 Minutes reporter walked in. Ecklund left the interview after only a few questions.

The show also purchased stem cells over the Internet from Stem Tech, ordering from the company's website. Joanne Kurtzberg, M.D., a renowned expert in umbilical cord blood transplantation, chief scientific officer of stem cell research at Duke University and a STEM CELLS editorial board member, tested the cells and found they were disintegrating and unsafe to use.

Anthony Atala, M.D., director of the Wake Forest Institute of Regenerative Medicine and editor of Stem Cells Translational Medicine, commented on the situation. "As with any treatment," he said, "it is imperative for patients to seek medical advice only from licensed physicians at reputable medical centers. Patients need to be aware of the safety and efficacy of any treatment offered."

"This is even more important when dealing with newer treatments, such as any type of stem cell therapy."

Jan Nolta, PhD, is editor of SCTM's sister journal, STEM CELLS. She also directs the University of California Davis's Stem Cell Program. She noted, "Without regulations and reputable centers, desperate patients could be infused with a simple saline solution or worse: infected, dead, or dangerously mismatched cells that could cause terrible infusion reactions and later side effects. The public is cautioned to seek more information on these centers and their associated clinicians than that which appears on their websites."

"The leaders of reputable clinics and hospital centers should have trials ongoing that have received FDA clearance, as can be found at the website," she added. "There should also be a history of scientific and medical publications from the associated scientists and physicians related to the proposed therapy in scholarly journals such as STEM CELLS and others."

At the time of this report, stem cell treatments are still available for purchase on Stem Tech's website. Ecklund also has posted a response to the 60 Minutes segment in which he denies any wrongdoing and defends his company's claims. It can be accessed at:

Learn more:
CBS News
Read what the California Institute of Regenerative Medicine (CIRM) has to say about stem cell fraud at: