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U.S. Department of Health and Human Services

Inspections, Compliance, Enforcement, and Criminal Investigations

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February 14, 2013: Metro Denver Man Found Guilty of Heath Care Related Fraud Following Jury Trial

 

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Food and Drug Administration 
Office of Criminal Investigations

 


 

 

             U.S. Department of Justice Press Release

 

 

For Immediate Release
February 14, 2013

 

United States Attorney

District of Colorado

 

DENVER – Late yesterday afternoon a federal jury found a Metro Denver man guilty of 17 counts of mail fraud, the United States Attorney’s Office and the Food and Drug Administration’s Office of Criminal Investigations announced.  John Edward Mullikin, age 51 of Arvada, was remanded into the custody of the U.S. Marshals Service immediately after the guilty verdicts were announced.  The case was heard by Senior Tenth Circuit Court Judge David Ebel, who is scheduled to sentence the defendant on May 15th at 2:00pm. Mullikin faces a maximum sentence of 20 years in federal prison and a fine of not more than $250,000.00 per count for each of the 17 counts.

According to the Indictment, as well as  evidence presented to the jury, between April 2006, and continuing through July 2008, John Edward Mullikin, devised and knowingly executed and attempted to execute a scheme to defraud various individuals throughout the United States. The scheme to defraud involved luring individuals throughout the United States into paying monies to him in order to participate in a bogus clinical study with the promise the monies would be returned along with further compensation. During this same period of time, the defendant was serving a term of parole in relation to four separate felony convictions involving theft in Adams, Arapahoe and Denver counties. John Edward Mullikin promoted a study of his weight loss product, which he referred to as “medication”, that he claimed was not a placebo, and that he named “DBL-824" on one website and “Evaril II” on another website. In truth and in fact, the substance was a placebo that merely contained small amounts of vitamins E and C. He then recruited study participants by advertising throughout the United States in newspapers, magazines and on the internet, in the names of various business entities, which contained materially false and fraudulent representations in order to convince participants to enroll in his clinical trial.  John Edward Mullikin made materially false and fraudulent representations that the study was part of the National Institutes of Health Obesity Research Task Force and was the subject of a legitimate clinical study “conducted by a respected university research center.” 

John Edward Mullikin also made materially false and fraudulent representations that clients would be participating in an “observational efficacy study” of his weight loss product, that “DBL-824 has demonstrated significant effect in Phase I, Phase II, and Phase III clinical trials,” and that “This observational study will obtain further data to complement the recently completed control studies,” when in fact no such clinical studies had ever been conducted. He required all participants to pay an advance fee of $150 “refundable deposit” for the Evaril II study and $144 “one-time refunded deposit” for the DBL-824 study, both of which he falsely represented would be refunded along with the promised compensation. John Edward Mullikin lured participants into the study by making materially false and fraudulent representations that participants would be compensated over $1,000 by the conclusion of the 6 month Evaril II Study and $319.72 per month for 24 months (a total of $7,673.52) by the conclusion of the DBL-824 study. During the scheme, John Edward Mullikin created non-profit corporations, registered trade names, and did business under assumed names, including but not limited to Progenics Research, Inc., IUCDHSC, Inc., RAND Corporation, Metacor labs, Evaril Study, and Research Study UCDHSC Evaril.

He also opened checking accounts at financial institutions in Colorado in his name and in the names of various business entities in order to receive checks and monies derived from the scheme. Further, John Edward Mullikin assumed  names such as John Milliken, Jack Edwards, John Edwards and Tim Alexander to conceal his true identity. He provided documents to his victims supporting those false and fraudulent representations, such as medical questionnaires, study descriptions, FAQ’s (frequently asked questions), and other materials stating the benefits of participating in a clinical trial. He also directed prospective clients to print and complete the “Enrollment Form” provided on his website and directed them to “mail the completed Enrollment Form and contact information” to various company names at various Post Office boxes in Colorado registered to and utilized by him. He thereby caused study participants to send checks, money orders, and monies written to various business entities, which he then caused to be deposited in bank accounts he controlled. Once he received the victims’ advance fee for participation in the study, John Edward Mullikin withdrew or spent the monies and ceased contact with his victims.  Mr. Mullikin did not pay the victims the compensation promised in exchange for their participation in his bogus clinical study, nor did he refund the advance fee that he described as a deposit.

“The defendant used the vulnerability of people seeking health solutions to steal from them,” said U.S. Attorney John Walsh.  “Thanks to the excellent team work between the U.S. Attorney’s Office and the FDA, a man with no ethics has been convicted of 17 felonies related to mail fraud.”

“This verdict demonstrates the FDA’s commitment to investigating cases of modern-day snake oil salesman; those individuals and businesses that bilk people of their money with the false promise of phony medical treatments,” said Special Agent in Charge Patrick J. Holland of FDA’s Office of Criminal Investigations, Kansas City Field Office.  “We applaud the U.S. Attorney’s Office for their commitment and dedication to this case.”

The Mullikin case was investigated by the United States Food and Drug Administration Office of Criminal Investigations.

The defendant was prosecuted by Assistant U.S. Attorney Jaime Pena.