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Strategic Market Development & Fraud Analyst Melayna Lokosky helped the U.S. Department of Justice (DOJ), recover $18 million in healthcare fraud from Johnson & Johnson subsidiary Acclarent, removed a misbranded medical device from the worldwide market; and, convicted two Silicon Valley executives, all in under five years.
In 2011, Lokosky, as a sealed federal whistleblower, taught the previously unknown Fraud Formula™ under The Sociopathic Business Model™to the FBI through her own case. Acclarent was a venture capital funded startup that in 2006 built overvaluation fraud into the business model, which acquiring company Johnson & Johnson was aware of and complicit in defrauding the U.S. government through FDA, DOD & CMS from 2010 until 2013. Had the government not intervened, the company would still be selling the product today.
The Fraud Formula exposed venture capital / private equity funded overvaluation fraud with the goal of preventing other startups like Uber, Theranos and WeWork from passing overvaluation fraud on to unsuspecting long-term investors via acquisition or IPO.
Lokosky, fell out of favor with DOJ, in January 2014, risking potential financial retaliation or federal prison, by becoming the first whistleblower in U.S. history to write publicly and actively about a sealed case on website Killing My Career for the safety, awareness and protection of employees, consumers, patients, shareholders and taxpayers.
Aware that parent companies like Johnson & Johnson often shift blame to subsidiaries to deceptively avoid accountability in the media or in search engine optimization (SEO), Lokosky negotiated six months with the DOJ to ensure the parent company’s name was in the federal press release headline, linking them permanently & complicitly with fraudulent & criminal behavior of the subsidiary.
Johnson & Johnson’s Pathological History of Unethical and Illegal Behavior
I started as a medical device saleswoman at venture capital-funded startup Acclarent in June 2007; and, there was a very clear message communicated to me and my fellow sales representatives in 2008 at the launch of the Relieva Stratus Microflow Spacer: “We know what we’re doing is wrong, but we’re too small for the Food and Drug Administration (FDA) to notice, and no rep would be stupid enough to kill their career by coming forward…”
Well, meet the rep “stupid enough” to kill my career to expose healthcare fraud that started at the inception of Acclarent in 2004 and was not only encouraged and replicated, it was rewarded when healthcare giant Johnson & Johnson acquired the company in January 2010 for $785 million. I was wrongfully terminated a year later for my efforts to expose the fraud involving the Relieva Stratus Microflow Spacer (Stratus). I rather naively thought that companies wanted to prevent fraud, not profit from it. Johnson & Johnson, knowingly and willingly purchased Acclarent and even lowered the company’s initial asking price while holding 15% in escrow for two years over their specific concerns related to the Stratus medical device.
Despite Johnson & Johnson being “very nervous” about Acclarent’s off-label selling of Stratus, they kept the product on the market until the FDA asked them to remove the product (and all five 510(k)s associated with the device) in 2013. Johnson & Johnson, nervously made money on the device from 2010-2013 and would still be making money on that product if I hadn’t have come forward to expose the fraud. Adverse events are under-reported at the startup level and only known to patients when injury or death occurs years later. Just as we’re seeing now with Gynecare mesh and Conceptus permanent birth control, also funded in part, by New Enterprise Associates (NEA) who was the largest investor in startup Acclarent.
Acclarent, like many venture capital-funded startups, hid behind innovation as a way to manipulate the facts in order to evade the law at great expense to the FDA, the company’s employees, the surgeons and hospitals to whom they sold the product and to government and private health insurance companies. Why? Because profits came before patients for Acclarent executives.
In July 2011, I met with Assistant Attorney General Sara Bloom with the United States Department of Justice in Boston, where I also eventually met with agents for Federal Bureau of Investigation, the Food and Drug Administration and the Department of Defense. Over the next five years, we, to quote the company line, executed one hell of a pre-call plan:
Many of us have known for years that white-collar corporate fraud is the new business model, and that unless white-collar executives are held accountable — not just financially but with jail time — then this sociopathic business model will continue to thrive. Those who expose fraud will be discredited or discarded, and those willing to break the law in favor of profits and at the expense of consumers will be encouraged and rewarded where this cycle is replicated. Facteau & Fabian, despite being arrested, indicted and now convicted in federal court have been rewarded by the industry and allowed to keep their current jobs in venture capital-funded startups.
Facteau, currently CEO of EarLens, and Fabian, CCO of NxThera — both of which are venture capital-funded startups — are appealing their 10 misdemeanor convictions, but WE have a unique opportunity to stop this cycle and put the boots to the sociopathic business model. WE have to force accountability on Judge Allison Burroughs, who oversaw Facteau and Fabian’s recent criminal trial and who is responsible for their sentencing, to ensure they serve a minimum of six months in jail. Each misdemeanor conviction can result in up to a year in jail, meaning a 10-years sentence is feasible. But even a six-month term would send a powerful message and would ensure that neither man will work in the industry again, nor can they hold board positions.
Please click on this link and ask Judge Allison Burroughs to sentence Facteau and Fabian before their appeals so if they are denied they will go immediately to jail.
Below is a list of titles from The United States Department of Justice’s press releases over the last year related to my False Claims case. Note the most recent also has Johnson & Johnson in the title along with subsidiary Acclarent, that’s one of the biggest wins for me personally because I fought very hard over the last five years to ensure that Johnson & Johnson couldn’t distance from their crimes by placing blame on the subsidiary without taking accountability. The DOJ doesn’t negotiate with terrorists or relators in whistleblower cases but I was able to force accountability on DOJ but that’s a story for another day.
I respectfully ask that the media take the lead from DOJ and also include Johnson & Johnson along with Acclarent in the headlines together to force accountability.
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The Sociopathic Business Model™ Fraud Formula™
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