Case against Merck allegedly providing false data on vaccine efficacy allowed to advance

Antitrust, FCA Claims On Merck Mumps Vaccine To Advance
By Dan Packel

Law360, Philadelphia (September 05, 2014, 6:12 PM ET) — Two lawsuits accusing Merck & Co. Inc. of lying about the efficacy of its mumps inoculation in order to keep competitors from bringing their own versions of the vaccine to market will move forward, after a Pennsylvania federal judge ruled in favor of whistleblowers and direct purchasers Thursday.
U.S. District Judge C. Darnell Jones II ruled that the whistleblowers had sufficiently pled that Merck might have provided false statements to the government and that the direct purchasers had shown enough evidence to establish that these falsehoods could have helped the company gain a monopoly. The judge did ax breach of contract and unjust enrichment claims against the pharmaceutical giant.

“We are pleased that the court has upheld our federal antitrust claim in this important case. While Merck has enjoyed an exclusive monopoly on the sale of mumps vaccine in the United States, mumps outbreaks continue to occur because, as we allege in our lawsuit, Merck has misled the public about the vaccine’s efficacy,” Kellie Lerner of Robins Kaplan Miller & Ciresi LLP, representing the direct purchasers, said in a statement. “This decision brings us one step closer to shining a light on Merck’s deceptive business practices so that new and more effective vaccines will ultimately be developed in the future.”

Since 1967, Merck has been the sole pharmaceutical company in the U.S. licensed to produce mumps vaccine, and the company has long represented that the vaccine is 95 percent effective in preventing the disease.
The whistleblowers, two individuals who worked as virologists in a Merck lab performing efficacy tests, claimed that after the company’s tests showed the vaccines slipping below the 95 percent threshold, it changed its methodology and falsified results but kept reporting to the Food and Drug Administration that the drug was 95 percent effective.

They claimed in their lawsuit, unsealed in June 2012, that Merck violated the False Claims Act by billing the Centers for Disease Control and Prevention for the vaccine while they were aware of its diminished efficacy and by falsifying and manipulating data that should have been shared with the government. They claimed that, as a result, the government had spent hundreds of millions of dollars on ineffective medicine. Continue reading “Case against Merck allegedly providing false data on vaccine efficacy allowed to advance”

US army investigates hundreds of soldiers for recruitment fraud

Officials tell Senate that illegal kickbacks cost the US at least $29m as part of national guard program to boost enlistment


Associated Press in Washington,   Tuesday 4 February 2014 17.43 EST

us army soldier kandahar afghanistan
The recruitment program began to improve enlistment during difficult years of the wars in Iraq and Afghanistan. Photograph: Massoud Houssaini/AFP/Getty Images

Hundreds of soldiers and others are under criminal investigation in what the military describes as a widespread scheme to take fraudulent payments and kickbacks from a national guard recruiting program. The fraud cost the US at least $29m and possibly tens of millions dollars more, officials said Tuesday. Continue reading “US army investigates hundreds of soldiers for recruitment fraud”

EPA reels as climate-change expert awaits sentencing for $1m CIA fraud

• John Beale pretended to be CIA agent for a decade
• Republicans round on agency chief Gina McCarthy
, US environment correspondent,  Monday 16 December 2013 14.19 EST

Gina McCarthy
EPA administrator Gina McCarthy testifies before a Senate committee in April. Photograph: Joshua Roberts/Reuters

It is a story that flummoxed investigators – how a highly paid climate-change expert at the Environmental Protection Agency managed to defraud the government of nearly $1m, by pretending for a decade to be an undercover CIA agent.

John Beale, 65, is to undergo sentencing in a DC federal court on Wednesday, after pleading guilty to defrauding the government of $900,000 in salary and other benefits. Beale, who used his ruse to disappear for months at a time, has agreed to pay some $1.3m in restitution. He faces up to three years in jail.

The scandal could rebound against the current administrator of the EPA, Gina McCarthy, and her efforts to carry out President Barack Obama’s climate-change agenda. Last week, an official investigation found that she knew of the fraud for more than a year. Other officials who worked with Beale at the agency are under investigation and in a report last week, the EPA inspector general said senior agency officials had “enabled” Beale by failing to challenge any of his stories or expense claims amounting to hundreds of thousands of dollars a year. Continue reading “EPA reels as climate-change expert awaits sentencing for $1m CIA fraud”

Journal withdraws controversial French Monsanto GM study : Even though “no evidence of fraud or intentional misrepresentation of the data.”

Source: Reuters – Thu, 28 Nov 2013 10:37 PM

Author: Reuters
* Hundreds of scientists criticised Seralini’s paper

* Journal editor asked to see raw data in investigation

* Paper withdrawn due to concerns about sample size

* “No evidence of fraud or intentional misrepresentation”

  • Opponents claim “The strain of rats used is highly susceptible to tumours after 18 months with or without GMO (genetically modified organisms) in their diets.”

By Kate Kelland

LONDON, Nov 28 (Reuters) – The publisher of a controversial and much-criticised study suggesting genetically modified corn caused tumours in rats has withdrawn the paper after a yearlong investigation found it did not meet scientific standards.

Reed Elsevier’s Food and Chemical Toxicology journal, which published the study by the French researcher Gilles-Eric Seralini in September 2012, said on Thursday the retraction was because the study’s small sample size meant no definitive conclusions could be reached.

“This retraction comes after a thorough and time-consuming analysis of the published article and the data it reports, along with an investigation into the peer-review behind the article,” the journal said in statement.

At the time of its original publication, hundreds of scientists across the world questioned Seralini’s research, which said rats fed Monsanto’s GM corn suffered tumours and multiple organ failure.

The European Food Safety Authority (EFSA) issued a statement in November 2012 saying the study by Seralini, who was based at France’s University of Caen, had serious defects in design and methodology and did not meet acceptable scientific standards.

Within weeks of its appearance in the peer-reviewed journal, more than 700 scientists had signed an online petition calling on Seralini to release all the data from his research.

Continue reading “Journal withdraws controversial French Monsanto GM study : Even though “no evidence of fraud or intentional misrepresentation of the data.””

Ukrainian thugs scam State Dept, highlighting flaws in ‘diversity visa’ program

Posted By Brendan Bordelon On 8:48 AM  10/29/2013 In  | No Comments

Ukrainian fraudsters are duping the State Department’s diversity visa program to extort cash from Ukrainian citizens and gain access to American Social Security numbers, a new report by the department’s inspector general alleges.

“Organized fraud rings masquerading as travel agencies have taken control of the Diversity Visa program in Ukraine,” the report claims.

Begun in 1990, the diversity visa program allows citizens from underrepresented countries to vie for one of 50,000 visas available through a yearly raffle system. Prospective immigrants need only send a photo, basic biographical information and a signature to be entered into the computerized lottery.

But that simplicity created an unexpected problem. Investigators discovered that organized crime elements in Ukraine were buying, stealing or obtaining from public databases the basic personal information of Ukrainian citizens and then entering that information into the State Department’s automated green card lottery.

Once an individual is selected for a diversity visa, the criminals receive the confirmation code and offer to provide it to the unwitting entrant for $15,000. If he or she refuses to cooperate, the fraudsters often threaten violence. Many victims without cash are forced to enter sham marriages with individuals interested in immigrating to the United States, leaving behind friends and family in the process.

“The fraud ring’s involvement continues after the selectee enters the United States,” the report continues, claiming that the criminals apply for and receive the individual’s social security card and retain it for “misuse.” Selectees are also required to send money earned in America back to the Ukrainian mob, which the report calls “indentured servitude.”

The inspector general estimates that fraudsters enter around 80 percent of western Ukrainians into the diversity visa lottery annually, leaving millions at risk of extortion every year.

“Fraud has been an issue in the diversity visa program in Ukraine for years,” said David Seminara, a former U.S. diplomat and a fellow at the Center for Immigration Studies.

“My sense is that Foreign Service Officers on the ground in Kiev have been working to combat it, and have probably been asking State to fix this problem for a very long time,” he told The Daily Caller News Foundation. “But their concerns obviously haven’t been addressed.”

The inspector general suggested that diplomats in Kiev manually notify diversity visa winners and double-check to ensure selectees’ addresses are correct. “At the very least, State should follow the procedural recommendations in the inspector general report,” Seminara said.

But Seminara believes the massive fraud should prevent Ukraine from being on the list of nations eligible for diversity green cards. In fact, he thinks it may be time to retire the program altogether.

“Let’s go ahead and scrap the entire green card lottery,” he wrote on Monday. “We can afford to be picky about who we let in, so there is really no point in admitting people based on the spin of the wheel.”

“Would you hire someone to babysit your children via a random lottery?” he asked. “Then why should we invite people to live here in such a fashion?”

This isn’t the first snag caused by the automated diversity visa program. In 2011 a computer error caused the entire raffle to be re-run, shattering the hopes of thousands who thought they’d finally made it to the United States.

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Local hero and ‘Christ-like’ millionaire accused of massive fraud in Utah

  • Jeremy Johnson,  37, is charged with defrauding more than $275 million from ‘unwitting’ customers  over five years in an online marketing scam
  • The scam would  allegedly sign customers up to online programs with monthly fees without their  knowledge
  • Johnson, who has  grabbed headlines for charitable acts including flying his own helicopter on  rescue missions to earthquake-ravaged Haiti, has denied the charges
  • The Utah  businessman and his affiliates have been gagged from speaking publicly about the  case after campaigning online against his prosecutors

By  Alex Greig

PUBLISHED: 19:34 EST, 17  June 2013 |  UPDATED: 20:28 EST, 17 June 2013

An internet marketing millionaire from St  George, Utah, has been accused by the Federal Trade Commission of being the  ‘mastermind’ behind one of the biggest cases of online marketing fraud ever  perpetrated in America.

Jeremy Johnson, 37, has become known in his  native Utah for his selfless acts of heroism, including mounting his own relief  mission to Haiti after the earthquake in 2010, and literally giving the shoes  off his feet.

But according to the FTA, the money Johnson  has so generously donated wasn’t his to give, and had in fact been amassed by  luring online customers with promises of free CD-ROMS for which they only had to  pay a nominal shipping fee. These customers’ credit cards would then be charged  for recurring monthly memberships they hadn’t agreed to and weren’t aware  of.

Alleged scam: Indicted St. George businessman Jeremy Johnson walks to the federal courthouse before a hearing Thursday, June 13, 2013, in Salt Lake City 

Alleged scam: Indicted St. George businessman Jeremy  Johnson walks to the federal courthouse before a hearing Thursday, June 13,  2013, in Salt Lake City

Over a five-year period, the company of which  Johnson was founder and CEO, I Works, allegedly stole more than $275 million  from customers, and discouraged them from seeking compensation from their credit  card companies by threatening to report them to a website called  – a site run by I Works.

And while Johnson’s philanthropy was  well-known, his lifestyle was not exactly humble. According to The New York  Times, he owns a 22,000-square-foot  home in a gated community in a St. George  suburb, a 1957 Chevrolet Bel Air and  other classic cars, houseboats and  helicopters. His case files contain  statements from witnesses alleging  he ‘amassed bundles of cash and buried  caches of gold’.


It’s a fall from a great height for the  six-foot-tall, red-headed Johnson,  who appeared to be casting himself into the  ‘affable millionaire’ mold  by rescuing stranded mountaineers in his helicopter  and housing people  fleeing from Utah’s polygamous communities.

‘When I think of Jeremy Johnson, I  think of  the most generous person I ever met,’ Daniel Gardner, an  assistant loan officer  in Provo, Utah and friend of Johnson, told The  New York Times. ‘Whatever he  had, he would give and give and give.’

Gardner described Johnson, who he met as a  boy scout, as ‘one of the most Christ-like people I have ever come to  know.’

Philanthropy: Here, Johnson works to provide aid for people affected by the Haiti earthquake in 2010 

Philanthropy: Here, Johnson works to provide aid for  people affected by the Haiti earthquake in 2010


In addition to the FTA investigation, Johnson  and five of his associates are now facing 86 related criminal charges, including  making false statements to bank, wire fraud, bank fraud, engaging in fraudulent  banking activities, conspiracy to launder money and money laundering brought by  the United States attorney in Utah.

Johnson categorically denies any wrongdoing  in both cases. According the the Times, court filings by his lawyers say the  FTC’s case is ‘filled with half-truths, distortions and inflammatory rhetoric  that is not supported by the evidence.’

According to The Salt Lake  Tribune, the company allegedly set up  80 ‘shell accounts’ to accept payments without being detected.

High places: Utah Attorney General Mark Shurtleff received more than $200,000 in campaign donations from Jeremy Johnson but is no longer commenting on Johnson or the case 

High places: Utah Attorney General Mark Shurtleff  received more than $200,000 in campaign donations from Jeremy Johnson but is no  longer commenting on Johnson or the case

‘They had no employees, they had no office  locations, they were mail  drops,’ Collot Guerard, the lead FTC attorney on the  lawsuit, told the  Tribune.

‘They were essentially fronts, and they  didn’t have any  substance to them other than lending their name to obtain a new  merchant account when Jeremy Johnson and I Works were no longer able to get  merchant accounts.’

Johnson’s business offered customers catalogs  of government grants and information about how to apply for them. Once someone  signed up for a catalog, to be delivered via main on a CD-ROM, they were then  given one week to cancel their membership, after which they were signed up for  membership to various different programs which all charged a monthly fee.

Denial: Johnson has denied any wrongdoing in the case against him, in which he allegedly swindled more than $275 million from unwitting consumers 

Denial: Johnson has denied any wrongdoing in the case  against him, in which he allegedly swindled more than $275 million from  unwitting consumers

This is legal – if the marketing material  makes full disclosure to the customer and the customer  consents.

But according to federal prosecutors, I  Works-affiliated sites often displayed disclosures in very small print, and  sometimes didn’t disclose the information at all.

According to The New York Times, the FTC  began investigating I Works in 2009 after Visa noticed an ever-growing number of  customers wanting to reverse charges for online membership programs, called a  ‘chargeback’.

It was difficult at first to link the  chargebacks to I Works, since the company was operating under so many different  names and so many different programs, including Easy Grant Finder, Bottom  Dollar, Business Funding Success, Fast Gov Grants, Cloud Nine Marketing, CPA  Upsell Inc., Employee Plus and many, many more, according to court  papers.

I Works was closed after the charges were  brought, but according to prosecutors, Johnson transferred many of his assets,  including gold bullion and his home, into the names of his parents and his wife,  Sharla, who have now been named as ‘relief defendants’ by prosecutors for  receiving ill-gotten gains.

Johnson went on the offensive after being  indicted. According to The Salt Lake  Tribune, he launched an online  campaign to clear his name. He accused federal prosecutors of threatening to  indict his family if he doesn’t plead guilty in his criminal case and accused a  FTC attorney of tampering with witnesses in YouTube videos, created an website which he promoted on Twitter, made a Facebook page where  people can make negative comments about the United States Attorney for the  District of Utah and conducted interviews with reporters in which he reiterated  the points he’s made online.

Federal prosecutors grew weary of this and a  federal judge granted a gag order against Johnson and his associates to prevent  them from commenting publicly about the case.

According to the Tribune, Johnson  has been arrested twice since he was charged in 2010: ‘once in a Phoenix airport  attempting to leave the country en route to Costa Rica, a few months after  receiving a federal indictment for mail fraud’ and again ‘in Washington County  for an outstanding Nevada  warrant, which was issued after he bounced several  bad checks meant to  cover more than $100,000 in gambling losses at a Las Vegas  casino’.

The FTC case against Johnson in the District  Court of Nevada is ongoing, and the criminal charges against him will be pursued  at its conclusion.

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Scientific fraud: a sign of the times?

Are dodgy lab dealings a modern day dilemma or business as usual?

Skull of the famous hoax Piltdown Man
The infamous Piltdown Man skull. Photograph: Rischgitz/Getty

If you read about scientific fraud in the recent news, it would seem that there is much to worry about. It’s on the rise, apparently! There has been a 10-fold increase in the number of retracted papers since the 1970’s, and a number of these are due to fraud or suspected fraud.

An investigation of retractions from the biomedical scientific literature database PubMed published in the prestigious Proceedings of the National Academy of Science USA (PNAS) found that a whopping 63.2% of health- and life-science related retractions were due to fraud, suspected fraud or plagiarism, with good old honest error retractions in the sound minority. This sounds scary – especially the ‘suspected fraud’. Is this just the tip of the scientific deceit iceberg? Just how many lies are lurking in the scientific literature?

Then there are the stories. Professor Marc Hauser (formerly) of Harvard was accused by the U.S. Department of Health and Human Services’s Office of Research Integrity of inventing results to support his idea of a biological foundation for cognition in monkeys – specifically if they could recognize changes in sound patterns like human babies can. Hauser was a popular scientist too; he even has a best-selling book: Moral Minds: How Nature Designed Our Universal Sense of Right and Wrong where he somewhat ironically argued that “policy wonks and politicians should listen more closely to our intuitions and write policy that effectively takes into account the moral voice of our species.” Which worked out in his case; he was busted for scientific misconduct. His book also tells us that “our ability to detect cheaters who violate social norms is one of nature’s gifts”. Nature’s gifts or not, his students and research assistants blew the whistle.

And this isn’t just in life science, it’s everywhere. Physics has its high profile cheaters too! There is Jan Hendrik Schön, the physicist who made up his data – 26 of his papers have been retracted and he has been stripped of his doctoral degree. And then there is the cold fusion boys who, to be fair, are probably more victims of faulty equipment and sticking to your beloved theory despite the facts, than perpetrators of actual fraud. Psychology is not immune either; Dirk Smeester, whose results seemed too good to be true, has also been caught just making stuff up.

Is no scientific discipline safe? Are scientists just incapable of keeping their modern houses clean? It has been argued that because of recent pressure for scientists to publish groundbreaking results that change the world, the temptation to commit fraud is perhaps bound to increase, implying that there was a simpler, more honest time for science. Dewy-eyed, there is a temptation to believe that scientists back in the day were only of high moral character and were purely duty-bound to pursue the truth. But this isn’t really true. Fraud in science isn’t new, just like fraud in anything isn’t new.

Take Piltdown Man, the famous Sussex fossil. In 1912, amateur archaeologist and premier forager Charles Dawson discovered the link between ape and man – Piltdown Man. He presented his results to the Geological Society and was much revered for his discovery – huzzah, a link which proved Darwin’s theory! Piltdown man was 1912’s version of high-impact science and as such had some legs. It was used as far abroad as Tennessee in 1925 by the theatrical Clarence Darrow during the Scopes monkey trial in defense of teaching evolution in schools. Piltdown man was finally proven to be a hoax in 1953. Not a mistake – a hoax. Orangutan jawbone, human skull. It turns out Dawson himself was somewhat of a serial fraudster; he also faked findings of Roman bricks and proof of early Roman iron casting. Serial fraudsters are modern too, according to the findings from PNAS, which found that 44% of the fraud-retractions are due to serial fraud.

Upon a slightly closer inspection, looking at the actual retraction numbers in the PNAS study, there have been a total of 2047 papers retracted (between 1977 and May 2012) from the biomedical literature. This is 2047 papers out of almost 25 million papers in the PubMed database – so 0.00008 % in total. This number is tiny. Yes, there has been a 10-fold increase in the microscopic number of retracted papers in 1977 (0.00096%) relative to the similarly microscopic number (0.0096%) in the period from 2007 to May 2012, but it is still a microscopic number. The PNAS study isn’t normalized against the total number of papers published per year in the biomedical sciences. Given that there has been an overall increase in the absolute number of papers published in the biomedical sciences since the 1970s, this 10-fold increase is even more microscopic. It is not an increase significant enough to even really worry about.

Still, fraud stories are scary, even if infrequent. Scientific works reported in academic journals undergo peer-review prior to publication, so on the surface it might seem that fraud should be more easily detected. In the peer-review process, or reading any scientific publication for that matter, trust is important. In the same way we trust people in general. Some people lie, some people don’t. If you meet a new person and they tell you they used to live say in Tennessee, you usually just believe them, without doing a background check. If they are lying, it usually becomes pretty apparent after a few minutes, especially if you have been to Tennessee. Unless of course they are pretty good liars or you have never been to Tennessee – then it might take a bit longer to work it out.

The same thing happens in scientific literature; when a paper is reviewed, no one goes for a visit to the laboratory where the work was done – there has to be some degree of trust. If someone is falsifying data they usually get found out. No one else can repeat the experiments, no one else can find any evidence for the authors’ claims. This is actually a standard part of science. Scientific experiments must be repeatable. Theories or hypotheses must verifiable in some manner to stand the test of time. If a scientific work cannot be verified or repeated then it tumbles off into oblivion, like most scientific theories (most people for instance have never heard of the theory of phlogiston, though it was a very popular scientific theory back in the day). Rather than heading for an iceberg that threatens to sink modern science in a wave of fraud and deceit, science is the same as it ever was. Errors in the science literature, whether a result of fraud or honest errors or faulty equipment, ultimately will either fall off into obscurity or get found out – like Schön, Hauser and Piltdown man. Science has a way of righting itself, as to be successful in the long run it must stand the test of time.

Applying algorithm to social networks can reveal hidden connections criminals use to commit fraud, says UAlberta researcher

Contact: Jamie Hanlon 780-492-9214 University of Alberta

Math tree may help root out fraudsters

Fraudsters beware: the more your social networks connect you and your accomplices to the crime, the easier it will be to shake you from the tree.

The Steiner tree, that is.

In an article recently published in the journal Computer Fraud and Security, University of Alberta researcher Ray Patterson and colleagues from the University of Connecticut and University of California – Merced outlined the connection linking fraud cases and the algorithm designed by Swiss mathematician Jakob Steiner. Fraud is a problem that costs Canadians billions of dollars annually and countless hours of police investigations. Patterson says that building the algorithm into fraud investigation software may provide important strategic advantages.

The criminal path of least resistance

To quote a television gumshoe, everything’s connected. Figuring out who knows who and who has access to the money is like playing a game of connect-the-dots. Patterson says that for crimes like fraud, the fewer players in the scheme, the more likely it will be accomplished. Maintaining a small group of players is also what links it to the Steiner tree. He says that by analyzing various connecting social networks—email, Facebook or the like—finding out the who, what and how of the crime can be boiled down to numbers.

“You’re really trying to find the minimum set of connectors that connect these people to the various [network] resources,” he said. “The minimum number of people required is what’s most likely to be the smoking gun. You can do it with math, once you know what the networks are.”

Fraud and the Steiner tree, by the numbers

In their article, Patterson and his colleagues explored how networks such as phone calls, business partnerships and family relationships are used to form essential relationships in a fraud investigation. When these same relationships are layered, a pattern of connection becomes obvious. Once unnecessary links are removed and false leads are extracted, the remaining connections are most likely the best suspects. Patterson says that finding the shortest connection between the criminals and the crime is the crux of the Steiner tree.

“All of these things that we see in life, behind them is a mathematical representation,” said Patterson. “There are many, many different algorithms that we can pull off a shelf and apply to real-life problems.”

A potential tool for the long arm of the law?

Patterson says that with the amount of work that could potentially go into investigating a fraud case, such as obtaining warrants for phone or email records, and identifying and interviewing potential suspects, developing a program that uses a Steiner tree algorithm may save a significant portion of investigators’ time—time that, he says, could likely be reallocated to backlog or cold case files. “If you can reduce your legwork by even 20 per cent, that has massive manpower implications. I think algorithms like this one could help you reduce your legwork a lot more than that,” he said.

Although there is software that police and other law enforcement agencies can use to solve fraud, Patterson sees no evidence that those programs use a Steiner tree algorithm, something he says would bring some structure to an unstructured area. He hopes programmers and investigators will take note of the findings and make changes to their practices.

“It might take several years or many years before anyone picks it up,” said Patterson. “But it’s a good thing if we can point people towards what’s useful.”