June 24, 2013: Metro Denver Man Sentenced to Federal Prison for Health Care Related Fraud
Food and Drug Administration
Office of Criminal Investigations
U.S. Department of Justice Press Release
For Immediate Release
June 24, 2013
United States Attorney
District of Colorado
DENVER - John Edward Mullikin, age 51 of Arvada, was sentenced today by U.S. Circuit Judge David M. Ebel to serve 72 months in federal prison, the United States Attorney's Office and the Food and Drug Administration's Office of Criminal Investigations announced. Mulliken was also ordered to pay $5,376 in restitution, and following his prison sentence, the defendant will have to serve 3 years on supervised release. Mullikin, who appeared at the sentencing hearing in custody, was remanded the hearing's conclusion.
Mullikin was indicted by a federal grand jury on November 14, 2011. A superseding indictment was obtained on August 21, 2012. Following an 8 day trial, on February 13, 2013, a federal jury found him guilty of 17 counts of mail fraud. He was sentenced today, June 24, 2013.
According to the court documents and evidence presented at trial, 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 Mullikin case was investigated by Special Agent Mary LaFrance of the United States Food and Drug Administration Office of Criminal Investigations.
The defendant was prosecuted by Assistant U.S. Attorney Jaime Pena.