Part II Venture Capital Firm New Enterprise Associates (NEA) Funds Medical Device Fraud
Updated: March 26, 2016
The Sociopathic Business Model™ often reminds employees, consumers, patients, long-term shareholders and taxpayers to take the billion dollar blinders off of venture capital, made only more difficult by media elevating #GodsOfFrauds to hero status. The New York Times Top 20 Venture Capitalists Worldwide or Forbes Midas List both of which highlight people from venture capital firm New Enterprise Associates (NEA), neglect to mention the much darker side of venture capital: fraud.
November 5, 2015
*NEA was the principle venture capital firm 44.5% stake along with Johnson & Johnson Development Corporation JJDC (Johnson & Johnson’s venture capital division)**, Delphi Ventures, and Meritech Capital Partners
Part II: Venture Capital Firm New Enterprise Associates (NEA) Funds Medical Device Fraud
Johnson & Johnson Worldwide, Venture Capital firm New Enterprise Associates (NEA) Worldwide, and startup incubator ExploraMed, Mountain View, CA share a long history of creating & funding startup medical device fraud and is one of this country’s best kept secrets, by design. An exclusively obtained 41-page, first-person slide presentation from ExploraMed Founder and NEA Venture Partner, Josh Makower titled The Art Of Innovation, shows that unethical & illegal behavior is encouraged, replicated and rewarded and viewed positively while ethical behavior is removed and viewed negatively within the corporate culture and sales model. A sales model requested March 1, 2010 by Johnson & Johnson Worldwide Chairman & CEO Alex Gorsky and Worldwide Chairman of Medical Devices, Gary Pruden, just two months after Makower’s incubated startup Acclarent funded by NEA & Johnson & Johnson* sold to Johnson & Johnson’s Ethicon subsidiary for $785 million, this presentation became known internally at Johnson & Johnson as “Josh’s presentation,” and shared with more than 200 Johnson & Johnson executives and employees with the implied intent to replicate the success of the Acclarent sales model.
The success of the Acclarent sales model came to life on April 8, 2015, and yielded the arrest & indictment of former Johnson & Johnson Ethicon Acclarent CEO William (Bill) Facteau & VP of Sales & Training Patrick (Pat) Fabian for 18 counts of securities fraud and crimes related to the sales and distribution of medical devices, who are currently awaiting trail and out on $5 million & $500,000 bail. Facteau & Fabian, with funding from the pharmaceutical & medical device industry under the name Public Citizen, are currently fighting these charges citing the First Amendment as their defense. This is the unethical and illegal business model that’s being encouraged, replicated and rewarded within a very corrupt funding cycle.
While Johnson & Johnson is the most notable of the companies, privately held New Enterprise Associates (NEA) is the world’s largest venture capital firm with $17 billion in committed capital across 15 funds, and quite possibly worth more than Johnson & Johnson’s reported estimate of $133 billion. Incubator ExploraMed founded by Josh Makower who also co-founded startup Acclarent with John Chang received 44.5% of the company’s $100 million raised from NEA. It probably didn’t hurt that Makower is also an NEA Venture Partner and two other NEA Venture Partners Ryan Drant and John Nehra sat on the ExploraMed Board. Drant is still a current ExploraMed Board Member where Nehra recently retired from NEA and ExploraMed.
All three companies, Johnson & Johnson, NEA & ExploraMed are funding and feeding the medical device fraud cycle where the long-term damage of costing patients their health or lives and taxpayers billions is going unnoticed, until now.
The Art of Innovation
(Created as INCUBATOR INNOVATION) by ExploraMed Founder & NEA Venture Partner Josh Makower (first person presentation). (Unedited – metadata removed)
Click the bolded bars below for additional support documents.
January 2005 Acclarent Fraudulently Files a Patent
Patent Inventors and Acclarent Co-Founders Josh Makower and John Chang in 2005 knowingly & willfully filed a patent on balloon products they did not invent, Dr. Bruce Becker filed a patent in 2002 and through Quest Medical was working in conjunction with Acclarent on development & manufacturing. Julia Vrany, Theodore Lamson & Amrish Jayprakash Walke also listed as inventors.
September 2005 Acclarent sued for Patent Infringement
Dr. Bruce Becker & Quest Medical Inc. et al sue Acclarent et al (Including ExploraMed Makower, Chang & CEO Facteau) patent infringement, tortious interference, breach of contract & misappropriation of trade.
Noticeably missing from this lawsuit, Venture Capital firm NEA, despite Josh Makower, John Nehra & Ryan Drant all NEA Venture Partners and ExploraMed Board Members.
June 2006 Acclarent Pays to Settle Patent Infringement
August 2006 Acclarent Files Fraudulent 510 (k) with FDA
Two months after settling the patent infringement lawsuit on one product, Josh Makower, John Chang, Bill Facteau and Acclarent files their first fraudulent 510(k) with the FDA on another product according to The United States Department of Justice Assistant United States Attorneys Sara Miron Bloom & Patrick M. Callahan:
The patent on the product in question the Stratus Microflow Spacer was filed in 2004 by NEA Venture Partner, ExploraMed Founder, Acclarent Co-Founder Josh Makower with Acclarent Co-Founder John Chang, and Julia Vrany, Amrish Jayprakash Walke.
2010-2013 Johnson & Johnson Complicit with Fraud
January 2010, Johnson & Johnson under subsidiary Ethicon purchased Acclarent for $785 million. Johnson & Johnson was an Acclarent Venture Partner through Johnson & Johnson Development Corporation (JJDC), aware of the fraudulently obtained 510 (k) & off-label promotion of the Stratus Microflow Spacer, in that the company reportedly lowered the originally higher asking purchase price to $785 million related to concerns about Stratus.
Johnson & Johnson was complicit with fraud selling the Stratus Microflow Spacer from January 2010 until May 2013 when the company, under federal investigation, decided to pull the product from the U.S. market.
2015 Johnson & Johnson (JJDC), NEA & ExploraMed
One is done and more pop up:
Venture Capital Incubator Startup
NEA JJDC ExploraMed Acclarent
NEA JJDC ExploraMed MoxiMed
NEA JJDC ExploraMed NeoTract (Theodore Lamson (Former CEO)
NEA EarLens (former CEO of Acclarent William (Bill) Facteau) CEO
New trick, trying not to disclose who the investors are, hope the government gets on this quickly.
Not able to manipulate the CEO like at Acclarent
If they agree (accomplices) if not become (victims)
Only one person with an Einstein complex per company
Placing blame without taking accountability
Insult & demean
Created an unhappy/unproductive work environment
ExploraMed, Chairman & CEO, Associate Consulting Professor of Medicine Stanford Univeristy & NEA Venture Partner, Josh Makower lobbied Congress to repeal the 2.3 % medical device tax and through medical device funded advocacy group Citizen Petition tried to make the pathway to obtaining a 510(k) easier. A pathological professional history of manipulating facts without shame, remorse guilt or accountability while not recognizing the rights of others from patent infringement to fraudulently obtaining a 510(k) should prevent ExploraMed’s Josh Makower from presenting to any government agency on behalf of the public, citizens, or even the industry.
Fortunately, in part Makower’s Acclarent was already on the federal government’s radar when the FDA struck down the Citizen Petition in 2014, requesting a faster pathway for the 510(k). Faster than purposely setting out to defraud the U.S. Government by fraudulently obtaining a 510 (k) Makower & Chang held the patent to? Guessing that wasn’t in his presentation. Manipulation was the key to success for the Acclarent sales model created by ExploraMed, funded by NEA and replicated by Johnson & Johnson.
Part III: Johnson & Johnson, NEA & ExploraMed Following the Money.