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Former Johnson & Johnson Ethicon Acclarent Executives Arrested & Indicted on 18 Counts of Federal Fraud

Former Johnson & Johnson Ethicon Acclarent Executives Arrested & Indicted on 18 Counts of Federal Fraud

April 12, 2015

Former Johnson & Johnson Ethicon Acclarent, Inc. Executives, William M. (Bill) Factaeu & Patrick (Pat) Fabian Charged with Securities Fraud and Crimes Related to Sale and Distribution of Medical Devices

Checklist-of-Characteristic-of-The-Sociopathic-Business-Model (1)

April 10, 2015

DOJ Press Release (Friday afternoon) known as a data dump hoping none of the major news outlets will pick it up. I bet there are more than a few people who hope a nuclear war erupts this weekend so this gets buried Monday morning. If you’re reading this-please don’t allow that to happen.  Please get it out to Pharmalot (oh wait they’re owned by the WSJ).

NOTE TO MEDIA:  Please attach all the company names to a potential crime (Johnson & Johnson Ethicon Acclarent) as this forces accountability from a company (SEO) and does not allow them to place blame without taking accountability.

Case Study from the DOJ Press Release:

BOSTON – The former (but still financially JNJ funded) Chief Executive Officer and Vice President of Sales of Johnson & Johnson’s Ethicon’s Acclarent, Inc., a medical device company, were charged in an indictment unsealed today with conspiracy, securities fraud, wire fraud and violations of the Food, Drug and Cosmetic Act.

Description of Offense Charged Former Johnson & Johnson Ethicon Acclarent Executives Facteau & Fabian

William (Bill) Facteau, 45, of Atherton, California, and Patrick (Pat) Fabian, 48, of Lake Elmo, Minnesota, were indicted on one count of conspiracy, three counts of securities fraud, four counts of wire fraud and 10 counts of introducing adulterated or misbranded medical devices into interstate commerce.

The indictment alleges that Facteau and Fabian engaged in a scheme to fraudulently drive up Acclarent revenues and stock valuation by illegally marketing a medical device known as the Relieva Stratus Microflow Spacer (“Stratus”) for uses not cleared or approved by the United States Food and Drug Administration (“FDA”). Despite the fact that the company had told the FDA that the Stratus was a medical device intended to maintain an opening to a patient’s sinus, Facteau and Fabian launched the product intending it to be used as a steroid delivery device. #PRSPin Acclarent   The indictment alleges, however, that the FDA had specifically refused Acclarent’s request to clear the Stratus for marketing as a drug delivery device without further submissions to support that use.

#PRSpinUnSpun Acclarent  Co-Founders & Executives manipulated the facts and purposely & willfully withheld information from the rest of the company without shame, remorse, guilt or accountability for their personal benefit which are tactics right out of The Sociopathic Business Model™.

Facteau and Fabian are alleged to have sought to quickly develop and market products to create a projected revenue stream that would make Acclarent an attractive target for either an initial public offering (“IPO”) or acquisition. #PRSpin Johnson & Johnson The former health care executives allegedly concealed Acclarent’s illegal promotion and distribution of the Stratus as a steroid delivery device from potential purchasers of the company, including Ethicon, Inc., a subsidiary of Johnson & Johnson, (together, “Ethicon”).

#PRSPinUnSPun Johnson & Johnson Except someone at Johnson & Johnson Development Corporation (JJDC) green lit $26 million in VC money to the then startup Acclarent in January of 2009.  Hey Johnson & Johnson that’s inconsistent & contradictory language to action and a tactic right out of The Sociopathic Business Model™. Try again!

JJDC a division of Johnson & Johnson funds $26 million to Startup Acclarent

I’d put the links to the actual stories, except someone has been busy on the internet trying to re-write history.  Who wouldn’t want the truth to come out? Hmmmm. Stumped? Keep reading…

 Wall Street Jounral Announces Johnson & Johnson Ethicon Buy Acclarent December 2009

In early 2010, Ethicon purchased Acclarent for approximately $785 million.  #PRSPin Johnson & Johnson Facteau and Fabian received approximately $30 million and $4 million, respectively, for stock options and other compensation in connection with the merger of Acclarent into Ethicon.

#PRSPinUnSpun Johnson & Johnson This might be tough to believe but someone other than William (Bill) Facteau made more than $30 million when Acclarent sold to Johnson & Johnson and that someone is Acclarent Co-Founder Josh Makower who by some well-sourced accounts made more than $125 million.  Now many of you unfamiliar with this story will think he was just a Co-Founder along with engineer John Chang-but no-all three of their names were on of the patents.  And better still Johnson & Johnson is still funding William (Bill) Facteau, Josh Makower and John Chang (hey that was missing from the DOJ press release!) So Johnson & Johnson and Ethicon are trying to distance themselves from the crimes at Acclarent while still funding the Co-Founders Josh Makower, John Chang & William (Bill) Facteau.  The DOJ press release (likely written with JNJ approval) was quick to distance William (Bill) Facteau as a former CEO but JNJ is still financially funding him.   Hey Johnson & Johnson again that’s inconsistent & contradictory language to action. Try harder!

Startup funding:NEA ExploraMed Acclarent Johnson& Johnson/JJDC Ethicon  (Acclarent was founded on fraud)

Gods of Frauds: Board Whores Edition (Acclarent was funded by Johnson & Johnson who is still funding Acclarent Co-founders Josh Makower & John Chang along with former CEO William (Bill) Facteau.)

Nevro Corp. $126M IPO with No FDA Approved Product: Case Study (Can possible fraud be prevented?)

Former Johnson & Johnson Ethicon Acclarent CEO Facteau indicted & arrested STILL Funded by JNJ

Acclarent Co-founders Josh Makower, John Chang, and Former CEO William (Bill) Facteau, except it looks like Makower may be trying to rewrite history and now add Chang as a co-founder:

Crunchbase only lists Josh Makower as the Founder of Acclarent.

Crunchbase only lists Josh Makower as the Founder of Acclarent.

For those that have been playing along that’s:

Dorothy Down Killing My Career

Dorothy Down! (Current Worldwide President of Acclarent who decided to step down)

And the wings of a (STILL FUNDED by Johnson & Johnson) flying monkey just got clipped

The charging statutes provide for a maximum prison sentence of up to 20 years on each count of wire fraud and securities fraud, five years for the conspiracy count, and three years for each count for violations of the Food, Drug and Cosmetic Act, followed by a term of supervised release and a $250,000 fine or twice the gross loss or gain, whichever is greater.  Actual sentences for federal crimes are typically less than the maximum penalties.  Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

The case is being prosecuted by Assistant U.S. Attorneys Sara Miron Bloom and Patrick Callahan of the District of Massachusetts with the assistance of Trial Attorney Ross Goldstein of the Civil Division’s Consumer Protection Branch in Washington, DC and Beth Weinman in the FDA’s Office of General Counsel.  The case was investigated by the Federal Bureau of Investigation’s Boston Field Division; the FDA’s Office of Criminal Investigations; U.S. Department of Health and Human Services’ Office of the Inspector General; Department of Defense Office of Criminal Investigation; and the Department of Veterans Affairs’ Office of Inspector General.

The details contained in the indictment are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
#PRSPin: According to Ed Silverman of the WSJ Pharmalot:
A J&J spokeswoman sent us a note to say that the health care giant has “cooperated with the government in this investigation since receiving the subpoena in 2012, and will continue to do so.” And she adds that neither Acclarent nor Johnson & Johnson have been charged with or accused of any wrongdoing in the indictment.
#PRSpinUnSpun: So strange Johnson & Johnson spokeswomen like Sheri Woodruff no longer appear to be providing reporters with their names. Wonder why?  Hey funny the JNJ spokeswoman forgot to mention Ethicon in that little blub distancing from wrongdoing as the WSJ article from December 2009 clearly states:
Why is Johnson & Johnson Ethicon trying to distance from Acclarent when they funded the startup
It’s also inconsistent & contradictory for JNJ Spokeswoman to state that Acclarent hasn’t been accused of any wrongdoing when in fact Acclarent’s top two executives were arrested & indicted which is the definition of wrongdoing.
 At the end of Mr. Silverman’s article I tried (unsuccessfully) to leave the following comment:

“A J&J spokeswoman sent us a note to say that the health care giant has “cooperated with the government in this investigation since receiving the subpoena in 2012, and will continue to do so.” And she adds that neither Acclarent nor Johnson & Johnson have been charged with or accused of any wrongdoing in the indictment.”

Noticeably absent from the JNJ spokeswoman’s list is Ethicon who according to a WSJ December 2009 article clearly states that Johnson & Johnson’s Ethicon unit purchased Acclarent-perhaps an oversight or future indication?  http://www.wsj.com/articles/SB10001424052748703581204574600681959562054

Also not mentioned or perhaps not asked is if Johnson & Johnson Development Corporation which funded $26 million to Acclarent as a startup up through ExploraMed is in fact STILL funding former Acclarent CEO William (Bill) Facteau through ExploraMed via Neotract, Nevro, MoxiMed and perhaps even Earlens (they have 22 unnamed investors) where Mr. Facteau currently is CEO.

Boys Pushing & Pulling Stubborn Mule

It’s also interesting that none of the reporters asked the Johnson & Johnson spokeswoman why they still kept selling Stratus as “catalog only” after the purchase from Acclarent in 2010 up until May 2013 when they decided to pull it from the U.S. Market. Would that decision have anything to do with the 2012 subpoena Ms. Johnson & Johnson spokesperson mentioned they were cooperating with in the Pharmalot article?

Johnson-Johnson-Ethicon-Acclarent-May-2013-Stop-Selling-Stratus

It’s often been written on this site that there are a lot of felons in corporate America they just aren’t convicted yet. The Massachusetts District of the United States Department of Justice is on the road to trying to change that and my guess is that no amount of clicking together ruby red slippers will prevent them from easing on down that yellow brick road.
Brad Perriello from Mass + Device refers to 18 counts of fraud from Assistant U.S. Attorney Sara Miron Bloom as a slap-c’mon fella that’s a Bloom bitch slap that was felt all across the med device and startup industry-start doing your job!
Attempts to hack the site are forwarded to the authorities:
Attempt to hack April 11 2015 after Johnson & Johnson Ethicon Acclarent indictments announced
3 Comments
  • Thank you Lord for justice for the thousands and thousands of injured (and dead) patients harmed by the criminals in these corporations. Praise God the truth is being told. And thank you, Melayna, for your dedication and perseverance in making sure the truth is told here for everyone to see.

    It gives me strength and hope the hundreds of thousands of women injured worldwide by Johnson and Johnson’s Ethicon Inc’s Gynecare Worldwide (now known as Ethicon’s Women’s Health and Urology) will be vindicated for the pain and the suffering and the losses of their human dignity caused by their death devices, Gynecare TVT, TVT-O, Prolift, Prolift M and whatever else they may call it under whatever other company name.

    Thanks again, Melayna, for keeping us advised!!!

    April 12, 2015 at 3:46 pm
  • Rafeal Mazzini
    Reply

    I find it fascinating that J&J knew prior to acquiring Acclarent that off-label sales were being promoted, as noted in this WSJ article:

    http://blogs.wsj.com/pharmalot/2015/04/13/former-execs-charged-with-securities-fraud-at-device-maker-bought-by-jj/

    “the indictment notes that J&J’s Ethicon unit directed Acclarent to end “extensive” off-label marketing of the Stratus device, which was noticed during the due diligence process prior to the sale.”

    This means higher-ups in J&J were aware of this issue, but it’s unclear who they might be, and what actions they took as a result? It’s also unclear if any off-label sales continued under J&J’s control, since the article only states Acclarent was directed to end “extensive” off-label marketing, and not “all” off-label marketing. This seems to suggest that maybe some off-label marketing continued under J&J’s control? If so, I wonder if any current J&J management would face indictments?

    April 13, 2015 at 4:42 pm

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