Convictions Entered in Two Separate Texas Cases Involving Stem Cells

HOUSTON—Francisco Morales, 52, of Brownsville, Texas, and Illinois resident Lawrence Stowe, 59, have entered guilty pleas in a conspiracy to introduce misbranded and unapproved new drugs into interstate commerce, United States Attorney Kenneth Magidson announced today along with Patrick J. Holland, special agent in charge of the Food and Drug Administration (FDA)-Office of Criminal Investigations. Stowe and Morales both falsely represented they were licensed to practice medicine and that they each operated a medical clinics in Brownsville.

Just moments ago, Stowe admitted that beginning in January 2006, he utilized several businesses, Stowe BioTherapy Inc. and The Stowe Foundation, to advertise and promote a medical treatment protocol for the treatment of amyotrophic lateral sclerosis (ALS), also known as Lou Gehrig’s disease; multiple sclerosis (MS); Parkinson’s Disease; and other neurological diseases. This treatment protocol, which was named “Applied Biologics,” consisted of supplements, vaccines, patient-specific transfer factors, and, ultimately, stem cell therapy. Stowe falsely represented to patients that this treatment protocol had been reviewed by all levels of the FDA and was effective in the treatment of ALS, MS, and Parkinson’s. There is currently no cure for these diseases.

“These pleas are a victory for the American public, in demonstrating the FDA’s commitment to investigating cases of individuals and businesses that prey on the sick and vulnerable with phony medical treatments,” said Holland. “The FDA will continue to aggressively pursue perpetrators of such acts and ensure that they are punished to the full extent of the law.”

Stowe entered a plea of guilty today to conspiring with Morales and others to introduce supplements, vaccines, and stem cells that were not approved by the FDA, as well as introducing a misbranded and unapproved new drug called Immune Factor G-40 into interstate commerce, which had not been reviewed or approved by the FDA for human use.

Stowe further admitted that one of the unapproved drug products was a product called patient-specific transfer factors. In order to produce this product, he obtained the services of a pathologist in Bryan/College Station, Texas. He then directed patients to send samples of their blood to the pathologist for the purpose of growing bacteria that would later be used to create the patient-specific transfer factors. Stowe hired a laboratory in South Carolina to receive the bacteria, which was then fed to chickens. The eggs produced by these chickens were later freeze-dried, and the powder from the eggs was placed in capsules and sold to patients. Stowe admitted he knew the manufacturing process and the product itself were not approved by the FDA for that treatment of human diseases.

In January 2010, a person diagnosed with ALS had contacted Stowe about his treatment protocol. Stowe informed this person he would benefit from the treatment protocol and falsely stated it had been reviewed by all levels of the FDA. As a result, Stowe was paid $47,000 for drug products not approved for the treatment of any human disease.

On September 5, 2012, Morales was also convicted in this case. He admitted he sold an unapproved drug product to Stowe called SF 1019 knowing Stowe would sell this product to patients. Morales falsely represented to the public that he had extensive training and experience regarding stem cells and stem cell therapy, when his exposure was actually limited to attending seminars and reading materials published by researchers.

In June 2006, he received $8,300 from a couple to perform an unapproved stem cell procedure involving stem cells on their minor son who had experienced neurological problems after a near-drowning incident. Prior to performing the procedure, Morales falsely represented that the stem cell procedure would be beneficial to combat the child’s medical condition. He also falsely represented to two other patients that he obtained stem cells from private universities and had treated more than 1,000 patients using stem cells with only positive results.

Today, Morales also pleaded guilty in a second case for introducing stem cells extracted from umbilical cords into interstate commerce and introducing an unapproved new drug into interstate commerce.

Beginning in January 2007, he purchased stem cells from a company called Caledonia Consulting, located in Mt. Pleasant, South Carolina. After acquiring stem cells from Caledonia, he would travel to Mexico and perform stem cell procedures, knowing the FDA had not approved the use of stem cells to treat human diseases. Morales further admitted that in April 2009, he began purchasing vials containing stem cells from a company called Global Laboratories.

Morales was charged in this case along with Alberto Ramon, 50, of Del Rio, Texas, and Vincent Dammai, 42, of Mount Pleasant, South Carolina, who are set for trial on November 26, 2012. They are presumed innocent unless convicted though due process of law.

Morales faces up to five years in prison and a $250,00 fine for each of the two conspiracy convictions, as well as up to three years for introduction of an approved drug into interstate commerce. Stowe faces the same five-year sentence and $250,000 fine for one conspiracy conviction and up to three years and additional fines for each conviction of introduction of a misbranded drug and introduction of an unapproved drug into interstate commerce.

The cases were investigated by the FDA and the FBI, with assistance from Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys Samuel Louis and Cedric Joubert prosecuted the case, with the assistance of Carol Wallack with the Department of Justice Civil Division’s Consumer Protection Branch.