Regulator renews order targeting shell companies buying South Florida real estate

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November 12, 2019
By Ashley Portero

The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) renewed its Geographic Targeting Orders (GTOs) for South Florida.

The region is one of 12 metropolitan areas undergoing a crackdown on real estate-related money laundering.

The order requires title insurance companies to identify individuals behind shell companies that facilitate all-cash purchases of residential real estate. It applies to transactions above $300,000.

That has a significant impact on the region, which has one of the nation’s largest supplies of $1 million condos. Wealth migration is fueling the Miami market, according to the Miami Association of Realtors, which reports Miami- area luxury home sales increased almost 12% in the third quarter of 2019.

The order, in effect Nov. 12 to May 9, 2020, does not require reporting for purchases made by legal entities that are U.S.-based publicly-traded companies.

Andrew Ittleman, partner at Miami law firm FIDJ, said South Florida’s proximity to Latin America and thriving real estate market makes it a hot-spot for money laundering. He noted several Venezuelans in government positions have been prosecuted for moving funds out of Venezuela and laundering them through South Florida real estate as the country descended into economic crisis.

“When you’re in Miami you can’t help but admire the beautiful buildings in our skyline,” Ittleman said. “But when you understand where some of the money has come from, the FinCEN efforts make more sense.”

FinCEN initially issued a GTO for Miami in 2015 — the only city in the nation targeted at that time.

The newest order includes Miami-Dade, Broward and Palm Beach counties, as well as Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, New York City, San Antonio, San Diego, San Francisco and Seattle.

“Back then, FinCEN determined that ill-gotten money, proceeds of crime of one variety or another, was making it into Miami’s legitimate stream of commerce through real-estate purchases,” Ittleman said. “The GTO allowed FinCEN to get more information about real estate transactions in real time, and it was so effective that it was spread out to other U.S. jurisdictions.”

Ittleman said he expects the U.S. Treasury Department will eventually need to formalize the GTOs by writing regulations, rather than renewing temporary orders every six months. But those regulations would likely face steep opposition from real estate developers and investors, he said.

“It would take a lot to put regulations in place,” he said. “in the end, the title insurance industry would need to champion it and it doesn’t look like that will happen anytime soon.”

Click here to read the full article.

The new policy will increase scrutiny and pressure on stem cell clinics, according to industry experts.

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By Ashley Yeager
September 9, 2019

On Friday (Sept. 6), Google announced it would “prohibit advertising for unproven or experimental medical techniques such as most stem cell therapy, cellular (non-stem) therapy, and gene therapy.” The treatments, the company says in the statement, can have “dangerous health outcomes” and therefore have “no place” on the its platforms.

“Google’s new policy banning advertising for speculative medicines is a much-needed and welcome step to curb the marketing of unscrupulous medical products such as unproven stem cell therapies,” Deepak Srivastava, president of the International Society for Stem Cell Research, says in the statement. “The premature marketing and commercialization of unproven stem cell products threatens public health, their confidence in biomedical research, and undermines the development of legitimate new therapies.”

Some of these treatments have caused severe physical impairment, with several women going blind after receiving stem cell injections into their eyes. Scientists say many of the treatments’ claims are false, so the new policy could intensify scrutiny of the companies, according to The Washington Post. The US Food and Drug Administration has begun cracking down on the practices and marketing of stem cell clinics, which have otherwise largely skirted regulation.

“A number of us have pushed for this kind of policy over the years so this news is a welcome surprise,” University of California, Davis, stem cell biologist Paul Knoepfler tells The Post. He’s been criticizing the Google ads for stem cell treatments for years and says the move is a big deal because the ads recruited many of the same patients negatively affected by the treatments.

Andrew Ittleman, a Miami lawyer who represents several stem cell clinics, tells The Post the policy will damage companies with legitimate treatment claims. “It puts Google in the position of being a quasi regulator, taking on quite a significant amount of jurisdiction,” Ittleman says. “They’re painting the industry with a broad brush and companies with legitimate arguments are going to be collateral damage.”

The ban would go into effect in October, according to Fortune, and the company would not reveal how it would vet medical ads.

“The American Medical Association believes it is critical to distinguish between treatments that have been validated by appropriate scientific study, those that are promising, and those that are without foundation,” Patrice Harris, the association’s president, tells Fortune in an emailed statement. “We urge [Google] to make public the process they use to vet advertisements and what evidentiary standard they use for determining which treatments are appropriate to advertise.”

Despite the lack of details, proponents of the policy say it’s a big step forward and a long time coming. “These ads have been present on the Internet for at least 15 years—at least,” Sean Morris, chairman of the Society of Stem Cell Research, tells Fortune. “But better late than never.”

Click here to read the full article.

Money Laundering: US crackdown on Venezuelan cash

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In 2018, a Venezuelan banker was convicted of operating a $1.2bn money-laundering scheme funded with stolen government money. Investigators say most cash was used to buy real estate in Florida.

August 23, 2019

Last year, a Venezuelan banker was convicted of running a $1.2bn money- laundering scheme, all with stolen government money.

Investigators say most of the cash was used to buy real estate in Florida. The money was stolen from a country that is in a deep humanitarian and economic crisis.

United States authorities have launched a renewed crackdown on these kinds of schemes.

Click here to read the full article.

Google is banning ads for quack cures after years of profiting from them

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By Antonio Regalado
September 6, 2019

After brazenly taking ad money from health-care scammers, Google is finally saying no to ads for unproven stem-cell treatments.

New policy: Google, which pulls in more than $110 billion a year in online ad revenue, said in a statement posted on its advertising pages that under the new policy it will now “prohibit ads selling treatments that have no established biomedical or scientific basis.”

The policy will cover a host of bogus cures for cancer and ALS, as well as treatments that are under study but don’t have enough “formal clinical testing to justify widespread clinical use.” Ads for government-sanctioned clinical trials will be allowed, according to the Washington Post.

Big problem: Ads from stem-cell clinics have been a fixture of Google’s search results for years, funneling desperate patients to a growing industry of doctors who collect blood or other cells from patients, then re-inject them. Testimonials from celebrity NFL players and others have helped spread the quackery to sports medicine and orthopedics centers.

The treatments have little evidence to support their use and can be hazardous. Several people have ended up blinded or developed bizarre tumors. In China, the search giant Baidu was rocked after a 21-year-old college student died from a treatment he learned about in a promoted search result.

Growing embarrassment: Google’s advertising of sham medicine became a bigger liability in 2015 after the company launched Calico, a company seeking remedies for aging, and a health research subsidiary called Verily.

“We know that important medical discoveries often start as unproven ideas,” Google said in its statement today. “At the same time, we have seen a rise in bad actors attempting to take advantage of individuals by offering untested, deceptive treatments.”

Hype problem: Stem cells have been touted as the cure for just about anything, and some medical clinics claim the procedures are also exempt from regulation if they involve a person’s own cells, such as fat, blood concentrates, or bone marrow.

The US Food and Drug Administration has sometimes pursued the clinics, though, winning a case this summer against a Florida stem-cell company, US Stem Cell, and issuing a broad warning to consumers earlier this week.

Experts intervened: According to the International Society for Stem Cell Research, a body representing academic scientists, it helped draw Google’s attention to the role of ads in harming patients. In early 2019, executives from the internet giant were invited to presentations about the problems caused by the clinics as part of the National Academy of Sciences’ Forum on Regenerative Medicine.

“Google’s new policy banning advertising for speculative medicines is a much-needed and welcome step to curb the marketing of unscrupulous medical products,” the president of the society, Deepak Srivastava, said in a statement. “While stem cells have great potential to help us understand and treat a wide range of diseases, most stem cell interventions remain experimental and should only be offered to patients through well-regulated clinical trials.”

Ads still visible: The Washington Post, which first reported the new ad policy, says it will go into effect in October. A Google search today from Cambridge, Massachusetts, still returned numerous advertisements, such as one for the Boston Stem Cell Center, which sells a variety of treatments involving a person’s own cells.

Google as regulator?  Andrew Ittleman, a Miami lawyer who works for stem-cell clinics, told the Post that the ad ban could penalize “good” companies trying to follow regulations, as well as bad actors. Ittleman said some clinics had already been banned by Google starting two years ago.

“It puts Google in the position of being a quasi regulator, taking on quite a significant amount of jurisdiction,” he told the Post. “They’re painting the industry with a broad brush.”

Click here to read the full article.

New Google policy bars ads for unproven stem cell therapies

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By William Wan and Laurie McGinley
September 6

Responding to ubiquitous online marketing by stem cell clinics selling unapproved treatments for everything from achy joints to Alzheimer’s, Google announced Friday it will no longer accept ads for “unproven or experimental medical techniques,” including most stem cell therapy, cellular therapy and gene therapy.

The Internet giant said it was taking the step after seeing “a rise in bad actors” trying to take advantage of patients by offering “untested, deceptive treatments.” Often, Google said in a post explaining the new policy, “these treatments can lead to dangerous health outcomes and we feel they have no place on our platforms.” Its new policy will prohibit ads for treatments that have “no established biomedical or scientific basis.”

The new position comes as stem cell clinics have grown into a sprawling direct-to-consumer industry. Some clinics have told patients their treatments can help them with ailments such as macular degeneration, ALS, multiple sclerosis and degenerative lung diseases. Scientists and medical associations have likened the procedures to modern snake oil and accused the purveyors of preying on the hopes of seriously ill patients. The untested treatments, many researchers say, is imperiling patients and the reputation of a promising field.

After years of little enforcement, the federal regulators have begun to crack down on the clinics. And the new Google policy will add to the growing scrutiny and pressure, industry experts said.

When asked by The Washington Post last December about its policies about advertising by stem cell clinics, Google declined to answer questions about actions against specific companies. In a statement, the company said: “If we find ads that violate our policies, we take immediate action, which can include taking down violating ads or suspending an account altogether.”

At the time, the company said its existing policies already prohibited marketing potentially dangerous and fraudulent health products — a stance some stem cell experts criticized as insufficient.

“Google’s new policy banning advertising for speculative medicines is a much-needed and welcome step to curb the marketing of unscrupulous medical products,” said Deepak Srivastava, president of the International Society for Stem Cell Research, a leading group of scientists that gave Google advice on the policy. “The premature marketing and commercialization of unproven stem cell products threatens public health, the confidence in biomedical research, and undermines the development of legitimate new therapies,” he said.

Some treatments have resulted in severe injuries, including at least five women who were blinded after stem cell clinics injected its product into their eyes.

Stem cell clinics say they are offering treatment to patients who have few other options and that their treatment may have ways of helping patients that science can’t yet explain.

Some industry representatives criticized Google’s new ad policy on Friday. The ban on ads will unfairly devastate “good” companies along with “bad actors” without discriminating which ones are trying to treat patients safely and follow evolving FDA regulations, said Andrew Ittleman, a Miami lawyer who represents several stem cell clinics.

In the past two years, Google had already begun refusing ads from several stem cell companies on a case-by-case basis, said Ittleman, who has been hired by a few such companies to try, unsuccessfully, to appeal such decisions with Google.

“It puts Google in the position of being a quasi regulator, taking on quite a significant amount of jurisdiction,” Ittleman said. “They’re painting the industry with a broad brush and companies with legitimate arguments are going to be collateral damage.”

Google’s new ad policy, however, is unlikely to put the industry out of business. Many clinics have shown an ability to adapt nimbly to new regulatory rules and changes such as Google’s ad policy.

“This kind of ad ban hits hard because most companies rely on Google for a large share of their quality sales leads,” said a former marketing head for a Florida stem cell company. “But there are plenty of other channels you can switch to — Facebook, Bing, Yahoo.”

The marketing executive, who spoke on the condition of anonymity to avoid professional retaliation, said “These kinds of businesses are pretty savvy and have had to adapt a lot already. Many have previously been kicked off Google already. You learn to pivot and be resourceful.”

Another recent example of the industry’s ability to adapt, experts note, came when the Food and Drug Administration won a landmark lawsuit in June against a stem cell company selling stem cell procedures that extract clients’ fat tissue, spin it to isolate certain cells, and inject them back into the body.

Health officials hailed the case as a turning point in the government’s struggle to regulate the booming industry. But ahead of the legal victory, the industry had already begun to shift. Because the FDA was focusing on fat-based treatments, many clinics switched to treatments derived instead from s blood, bone marrow and birth-related tissues, such as amniotic fluid and umbilical cord blood.

Google officials said Friday they would continue to accept ads for clinical trials cleared by the government. It said that while important medical discoveries often start as unproven ideas, “we believe that monitored, regulated clinical trials are the most reliable way to test and prove important medical advances.”

The ban will take effect across Google’s ad services, including YouTube and ads Google helps place on third-party websites. And the ban includes treatments that are rooted in scientific findings and preliminary clinical experience “but currently have insufficient formal clinical testing” to justify widespread use. The new policy, which will take effect in October, was detailed in a blog post by Adrienne Biddings, the company’s policy adviser.

The post said that the “digital ads ecosystem can only flourish if it’s a place that is safe and trustworthy for users.” The company said it will use a combination of machine learning and human review to enforce it.

To formulate the new approach, a spokeswoman said, the company’s policy team has reviewed the literature on the field and worked with various stem-cell experts.

Paul Knoepfler, a stem cell biologist at the University of California at Davis and longtime critic of the for-profit stem cell industry, called the new Google policy a big deal. Many patients who have been seriously harmed, he noted, were initially recruited as customers via Google ads.

“A number of us have pushed for this kind of policy over the years so this news is a welcome surprise,” Knoepfler said.

Click here to read the full article.

Can Facebook Really Launch Libra in 2020? The Devil Will Be in the Details

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Facebook’s Libra plan for an alternative currency sounds audacious, but the company already has some of the infrastructure in place to muscle through regulatory hurdles.

By Annie Gaus
June 24, 2019

There’s no denying that Facebook’s crypto plans are ambitious. They might even seem a bit outlandish.

The gist of Facebook’s (FB – Get Report) Libra initiative, in the words of CEO Mark Zuckerberg, is to create a “simple global financial infrastructure.” But making that a reality is far from a slam dunk. Within hours of Facebook’s Libra reveal, skeptics called out seeming contradictions in the documents that Facebook published giving more details on the currency Libra, governing body the Libra Association, and the Calibra subsidiary that will manage digital wallets and other services.

The Libra announcement also sparked a swift backlash from lawmakers in the U.S. and elsewhere, with House Financial Services chair Rep. Maxine Waters (D-Calif.) and others calling for a moratorium on Facebook’s development of the project. It was met with doubts from much of the public, who have seen an unending parade of Facebook privacy scandals in recent years. And the organizational challenges for the social networking giant are also hard to quantify at this point.

With a planned launch date of 2020, the clock is ticking for Facebook to sort it all out. So with that in mind, I asked a dozen or so smart experts to weigh in on a simple question: What’s the likelihood that Facebook actually launches Libra, as it was initially described on Tuesday, by next year?

Perhaps unsurprisingly, opinions varied widely — from 100% likelihood all the way down to 0%. Also, it depends how you define “launch.”

“A better question would be the likelihood of whether Libra will launch at all,” said Ryan Taylor, CEO of the digital currency Dash, who placed the likelihood at 5%. “It will almost certainly launch somewhere so that the involved parties can save face, but I expect a crippled launch in limited numbers and geographies.”

If there’s one common theme among skeptics and optimists around Libra’s prospects, it’s that the first markets where Libra will launch will most assuredly not be in the U.S. or Europe.

In both geographies, Libra’s prospective launch takes place against a backdrop of growing distrust of Facebook and other tech giants. The DOJ and FTC are planning sweeping antitrust investigations targeting Facebook, Amazon (AMZN – Get Report) , Alphabet (GOOGL – Get Report) and Apple (AAPL – Get Report). Facebook is also a unique case: Apart from its sheer size and reach across the social media landscape — it has close to 2.5 billion users across Facebook, WhatsApp and Instagram — Facebook has also been accused of wrongdoing innumerable times over the past few years. Moreover, its entire business model is predicated on capturing and monetizing as much data as possible — leading to flat-out cynicism among some that Facebook’s “private” future, as defined by Zuckerberg this year, is much more than lip service.

In the whitepapers describing Libra, the Libra Association and Calibra, Facebook wrote that user accounts would be disassociated from anyone’s real-world identity. Elsewhere, however, the documentation suggested that “Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity.”

So, which is it — and how much does the answer even matter?

“From what I’ve read so far, more of the heartburn from the general public and media so far, is that being a payment system will require Facebook to gather additional information on behalf of Libra users — because to have an effective money laundering program, you need to know who your users are,” said attorney Andrew Ittleman of Fuerst Ittleman David & Joseph, who advises fintech and crypto companies on legal issues.

As ambitious as Libra may be, it’s not exactly forging a new path. Facebook’s crypto initiative would make Calibra a money transmitter, a category that includes PayPal, Western Union and Barclays. And what a money transmitter must do to stay on the right side of the law — specifically, Know Your Customer, anti-money laundering requirements, and registration with FinCen — is well-established at the federal level.

The business of sending money is also not new for Facebook. It has an existing payments feature within Messenger, which likely means that Facebook  already has some of the expertise and personnel needed to muscle through regulatory hurdles. When Facebook started tinkering with a payment product back in 2010, it also formed a subsidiary, called Facebook Payments Inc.

“The infrastructure they would need is likely already there,” he added. “Whether they’re going to create a new entity for this purpose, or perhaps have a service agreement [with Facebook Payments], I don’t know.”

But Facebook isn’t just any money transmitter: It’s a social media company, and a not particularly well-trusted one at that. Witnesses including David Marcus, Libra’s project lead and former president at PayPal (PYPL – Get Report) , have been asked to testify before the Senate Banking Committee on July 16.

In that hearing, questions around how data will be shared between Calibra, Facebook and the Libra Association — a group of 28 initial participants that include Uber (UBER) , Lyft (LYFT) , Mastercard (MA – Get Report) , Visa (V – Get Report) eBay (EBAY – Get Report) and others — are likely to arise.

“Yes, there are regulatory hurdles that Facebook needs to overcome,” added David Kemmerer of Cryptotrader.tax, a company that sells compliance software for crypto traders, who placed the likelihood of Libra launching at 75%. “It also has the same right as any other cryptocurrency company or financial service company to launch a payment system. As long as it stays in line with the law, which they have made it clear they intend to do, the regulatory hurdles can be managed.”

Click here to read the full article.

Key Takeaways From the Insys Prosecution

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In early May, a jury in Boston ruled that the founder of Insys Therapeutics, John Kapoor, as well as four other executives from the company, were guilty of a racketeering conspiracy.

By Andrew Ittleman
June 11, 2019

In early May, a jury in Boston found that the founder of Insys Therapeutics, John Kapoor, as well as four other company executives, were guilty of a racketeering conspiracy.

The scheme involved illegal payments to physicians who prescribed Insys’s highly potent fentanyl spray Subsys and false statements to insurance companies that covered the prescriptions. At their forthcoming sentencings, they will all face significant prison sentences and forfeitures.

This case has also devastated the company: Insys agreed last week to pay $225 million to settle the federal government’s criminal and civil cases against it and filed for Chapter 11 bankruptcy protection Monday.

So, what are the takeaways here — other than that the reckoning has finally come for the opioid industry? Here are just a few:

First, payments by product manufacturers to treating physicians can carry significant consequences. Enforcement authorities can easily see beneath “consulting” and “speaker program” arrangements to determine whether payments are actually designed to compensate physicians for prescriptions and referrals. In the Insys case, doctors were paid for participating in a “speaker program” even if lectures never occurred, or no one attended, leading to allegations that the arrangements were mere shams. Executives in the pharmaceutical and healthcare industries should understand that these arrangements are high risk, and in no way should payments be tied to prescriptions or referrals.

Second, the days of executives being immune from the consequences of corporate misconduct are over. In 2016, Deputy Attorney General Sally Yates issued the Yates Memo, which directed the Justice Department to “focus on individual wrongdoing” when investigating corporate misconduct, and required prosecutors to obtain special authorizations to avoid charging responsible individuals. Since then, high-level executives from a variety of industries have been prosecuted, and in spite of the change in administrations, this policy has continued unabated.

In the Insys trial, Kapoor’s primary defense was that he was unaware of the illegal conduct, but cooperating witnesses testified otherwise, and the jury reviewed numerous damaging emails among Insys personnel on which Kapoor was copied. In this new era of individual liability, Kapoor’s purported lack of knowledge was insufficient to avoid prosecution.

Third, the Insys prosecution revealed a corporate culture that completely disregarded the nature of fentanyl and the consequences of its marketing scheme. Indeed, media reports from after the trial described the jury as “sickened” by a rap video produced by Insys encouraging sales reps to encourage physicians to prescribe higher doses of Subsys. The video featured Insys sales executives and a dancing bottle of 1600 mcg Subsys, the highest available dosage of the product.

As tone deaf as the video was, it provides a valuable lesson about corporate culture and compliance. The lesson starts with this question: how can corporate personnel be so oblivious of their surroundings that they would make a rap video showcasing a dancing bottle of fentanyl? The answer is that the company allowed it to happen, encouraged it, and fostered a culture completely divorced from its compliance obligations. This corporate failure does not justify the criminal conduct of the Insys executives, but it does help explain it.

In recent years, various federal agencies have expressed the importance of having “cultures of compliance.” On the one hand, a company with a strong culture of compliance may avoid worst case scenarios if the company, or an individual working there, violates the law in some way. But on the other hand, those worst-case scenarios — including criminal prosecutions of corporate executives—become far more likely when the company has no culture of compliance and draws scrutiny from government agencies.

So how can a company create a culture of compliance? It starts from the top: the company, its executives, its investors, and its board must be committed not only to compliance, but to dedicating the necessary resources even when compliance is inconsistent with short-term revenues. Next, the company must conduct a gap analysis to understand its compliance obligations and risks.

From there, the company must build a program to prevent the specific compliance failures the company faces. The program should feature written policy documents, a compliance officer with stature, and employee education and trainings, all of which must be kept current to address changing regulations, new product lines, and the unique needs of the company.

Employees should also have a way to communicate their concerns to management and the compliance officer, anonymously if necessary.

Even if imperfect, a bona fide compliance program is invaluable. In addition to being the company’s best way to avoid worst-case scenarios, it can help create a culture of compliance that improves the operations of the company. It can teach employees about how the company is regulated, allowing them to spot possible compliance failures, and report them to management. Then, the company can extinguish those failures and self-report them as required by law. Compliance programs can also define the role of each employee, allowing them to stay in their lanes and avoid taking on tasks they have not been trained to complete. Finally, having created a culture of compliance, the company will have a better working environment because its employees will feel less anxious and vulnerable, reducing the risk that they will quit or become whistleblowers.

It may be that Kapoor had bad intent and got what he deserved. But Insys may simply have been a massive compliance failure that took on a life of its own and turned the company into a RICO organization. Regardless, addressing compliance at the earliest possible moment can help insulate a company from bad actors, avoid worst-case scenarios, obtain favorable treatment from regulators, and create a better, smoother working environment. This is no longer optional.

Andrew S. Ittleman is a founding partner with Fuerst Ittleman David & Joseph in Miami. He concentrates his practice on compliance and transactional matters for regulated businesses and government enforcement actions. Contact him at aittleman@fidjlaw.com.

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Judge Says FDA Can Stop Clinic from Selling Stem Cell Treatments

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The decision may facilitate the agency cracking down more effectively on the unproven interventions these companies sell.

By Emma Yasinski
June 7, 2019

 In 2015, a stem cell clinic in Florida conducted a procedure on three women to treat their macular degeneration. Instead, it left each of them with severe vision loss. The tragedy has been held up as an example of the lack of regulatory oversight the US government has had over such outfits that offer unproven stem cell treatments—and now, it’s an example of how that is changing.

On June 3, a federal judge ruled that the US Food and Drug Administration (FDA) is entitled to a permanent injunction against US Stem Cell, forcing the company to stop conducting procedures using a particular technique that involves isolating stem cells from clients’ fat.

The FDA also filed a suit against a California-based company Cell Surgical Network, which provides similar interventions, that is still pending in court.

“The lawsuit itself wasn’t surprising. The allegations weren’t surprising. And the judge’s conclusion wasn’t very surprising,” Andrew Ittleman, an attorney at Miami-based Fuerst, Ittleman, David & Joseph, a law firm that counts government compliance for stem cell and regenerative medicine companies as one of its key practice areas, tells The Scientist. “If anything, people were wondering why it took so long.”

Hundreds of stem cell clinics have popped up across the US and other countries in recent years, making promises with little evidence that their treatments can cure ailments that traditional medicine cannot. The clinics have often avoided FDA oversight by claiming that their procedures, which often use a patient’s own cells, are not subject to FDA regulations.

The agency has been cracking down on the industry, but it has only successfully obtained a judgment against a stem cell clinic once before. This latest ruling by Judge Ursula Ungaro of the United States District Court for the Southern District of Florida may represent a sea change in regulatory enforcement, and possibly open the door for the FDA to file suits against companies violating FDA guidelines for marketing stem cell treatments en masse, according to Ittleman.

“This is a landmark decision because this is only the second time the FDA has obtained a judgment against a stem cell clinic, and the first judgment since FDA announced in 2017 the agency’s risk-based enforcement priorities for regenerative medicine,” FDA spokesperson Stephanie Caccomo tells The Scientist in an email.

See “Texas Stem Cell Law Opens Door for Controversial Treatments”

 Research on stem cell therapies has ballooned in recent years, and some procedures for certain blood disorders have even been FDA-approved, but most remain unproven as far as the FDA is concerned. Extracting fat cells using liposuction, processing them to extract stem cells (known as stromal vascular fraction cells or SVF), and injecting them into other areas of the body— the strategy US Stem Cell uses—has been an FDA target before. Some clinics provide treatments with stem cells derived from bone marrow, cord blood, or birth tissue.

Ittleman, who has represented clients sued by the FDA, doesn’t believe the ruling will immediately affect clinics using other types of stem cells. “The fat [derived stem cell treatment] has been really the one place where the FDA has been very clear for very long about its position. We don’t necessarily have that clarity in other areas,” he says. The ruling may inspire the FDA to target other unapproved stem cell treatments with litigation, he adds.

The three patients who lost all or most of their sight were the first (and only) three participants in a discontinued clinical trial US Stem Cell was running on the procedure. Afterward, the patients saw university-based ophthalmologists for treatment, and those doctors published a report in March of 2017 in the New England Journal of Medicine detailing the adverse effects on each individual and raising concern about stem cell clinics.

US Stem Cell failed to follow best practice in ophthalmology of operating on one eye first, and returning later for a second surgery on the remaining eye. This way, if there is an adverse reaction, the patient can still see with the untreated eye. But the company conducted both procedures simultaneously.

Shortly after the failed procedures, two of the patients settled lawsuits with US Stem Cell, but the company faced few other penalties. While it stopped offering fat-derived stem cell treatments for macular degeneration, it continued to provide services using SVF that it claimed could treat myriad ailments, from Parkinson’s disease to chronic obstructive pulmonary disease (COPD).

The FDA sent a warning letter to US Stem Cell in August 2017 about marketing the unapproved products and violations to good manufacturing practices. But the company did not comply. Ittleman says they were “really sticking their fingers in the FDA’s eyes over the course of time saying, ‘You don’t regulate us.’”

In a written statement sent to The Scientist, US Stem Cell said, “While we believe there is substantial evidence to prove the efficacy of this protocol, we must immediately comply with the court as we review the decision.” A spokeswoman told The New York Times that the company plans to continue offering stem cell treatments derived from other tissue.

“Precedent from cases like this helps the FDA in future enforcement actions,” says Caccomo. “The FDA will continue to take steps—such as issuing warning letters or initiating court cases—against clinics that abuse the trust of patients and endanger their health with inadequate manufacturing conditions or by manufacturing and promoting products in ways that make them drugs under the law, but which have not been proven to be safe or effective for any use.”

Click here to read the full article.

Approval of Epidiolex, a Cannabis derived drug for the treatment of Seizures

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By Jane Clarke
April 16, 2019

Epidiolex became the first cannabis-derived medication to be approved by the FDA in June of this year. It is used to treat two types of serious childhood epilepsy from the British organization GW Pharmaceuticals. The Food and Drug Administration approved the drug for sale in the US on Monday. It will probably be available in pharmacies by prescription.

Epidiolex contains a chemical compound, cannabinoid otherwise called CBD. It is popular for its reported abilities to help relief from illnesses, for example, anxiety, joint pain, a sleeping disorder, and nausea.

Moreover, epidiolex is useful in treating an uncommon type of epilepsy called Lennox-Gastaut Syndrome (LGS) and a genetic brain dysfunction known as Dravet syndrome. According to CNN, the two disorders can cause seizures. In any case, Epidiolex, with its cannabis derivatives, has been found to reduce a particular kind of those seizures by as much as 25% to 28%.

FDA endorsed the medication back in April, but GW couldn’t sell it. The reason is the DEA has regarded cannabis a Schedule I drug alongside heroin, LSD, and cocaine. It means it is considered to have “no currently accepted restorative use and a high potential for abuse.” Now, Epidiolex specifically — however not CBD or cannabis — is Schedule V. “The DEA is stating, ‘if you’ve satisfied FDA, you’ve satisfied us,’” says Andrew Ittleman, a partner of the law firm FIDJ. It’s appearing “considerable amount of deference” to the FDA.

The Cooperation of DEA with Researchers:
The Department for Drug Enforcement (DEA) says it will work with the researchers to help them in their research. Marijuana and CBD got from cannabis stay unlawful in the United States except if they are in items endorsed by the FDA, for example, Epidiolex. Researchers are conducting more research into the medical benefits of cannabis.

“DEA will keep on supporting sound and logical research that advances legitimate therapeutic uses for FDA-approved components of cannabis, consistent with the federal law,” said Acting DEA Administrator Uttam Dhillon in a written proclamation. “DEA is focused on proceeding to work with our federal partners to look for approaches to make the procedure for research progressively proficient and effective.” The greatest unknown is how insurance agencies will choose to cover Epidiolex.

The double-blind, placebo-controlled trials required for FDA endorsement just covered two rare types of epilepsy—Dravet Syndrome and Lennox Gastaut Syndrome. Around 50,000 patients are suffered by these two diseases. However, there is evidence that Epidiolex could help with many distinctive kinds of seizures and epilepsy syndromes.

Without a doubt, 66% of the 1,756 patients who have attempted Epidiolex in the previous five years didn’t have Dravet or LGS. Epidiolex demand was so high among medication inert patients like Sam that GW permitted neurologists at almost four dozen hospitals that weren’t a part of the formal trials to direct their own so-called open-label trials. It helped GW to study more about how Epidiolex functioned in a more extensive population. It allowed many sick patients to gain access to medication that may help them.

That parallel research should make it simpler for specialists to suggest the medication for different diseases, a training known as “prescribing off label.”

To conclude, the expectation among CBD advocates is that the FDA’s endorsement could goad more investigation into medicinal cannabis items, however, weed itself stays illicit.

Although therapeutic or medical cannabis is accessible in about half of U.S. states. But federal regulations still characterize CBD as a Schedule 1 medicate, which implies it has no therapeutic value however it has a high potential for abuse since it is a chemical component of the cannabis plant.

Are You Eligible for Tax Savings with the Home Office Deduction?

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If you conduct some or all of your business from home, you may want to look into a home office deduction this tax season.

By Julie Bawden Davis
February 22, 2019

Do you use part of your home for business purposes? If so, you may be eligible for the home office deduction.

The home office tax deduction can be used whether you own or rent your home—this could mean significant tax savings.

“With proper planning, the home office deduction can offer some real tax savings to business owners who work from home,” says Brendan O’Connor, senior attorney with RJS Law Firm, a tax resolution law firm.

“Business owners who work from home have the potential to write off many costs associated with their home that would otherwise be nondeductible,” says O’Connor. “Taking the home office deduction can benefit a business owner’s tax situation.”

The home office tax deduction is beneficial for company owners who conduct part or all of their business from home, adds Cindy Dillard, CEO and partner of Small Business Accounting Tax & Bookkeeping Service.

“The deduction allows you to deduct a portion of expenses you pay to operate your home, such as mortgage interest and taxes, utilities, insurance, internet and phone and repairs,” continues Dillard. “If you have space in your home to designate for business, you can get a tax deduction for something you’re paying for anyways.”

Eligibility Criteria for Home Office Deduction

“In order to be eligible to take the home office deduction, your residential space must either be used regularly and exclusively for conducting business or be the principal place of the business,” says O’Connor.

According to O’Connor, the two key questions business owners should ask themselves are:

1. Do I have a dedicated space in my home for work?
2. Do I perform some or all of my job functions at home?

“If you can answer yes to both of these questions, I’d suggest exploring this deduction further with your CPA or tax professional, because it could mean hundreds and potentially thousands of dollars of tax savings, depending on your tax bracket,” says O’Connor.

Regular and Exclusive Use

In order to qualify for work from home tax deductions, part of your home must be exclusively used to conduct business. For instance, if you have an extra bedroom, you can deduct expenses for that room, providing you only use it for work. (That means your home office can’t also serve as a guest room.)

“There are exceptions to the exclusivity requirement,” says tax attorney Jennifer Correa Riera, a partner with Fuerst Ittleman David & Joseph. “These include if you run a business licensed to provide day care services for children, handicapped individuals or people 65 or older. It also applies when the business’s use of the home is for the storage of inventory or product samples.”

Principal Place of Business

In order to be eligible for the home office tax deduction, the business must have its principal place of business at the home.

“Generally, that means the portion of the home attributable to the business must be used exclusively and regularly to conduct the business’s administrative or management activities, such as keeping the business’s books and records, billing customers or setting up appointments,” says Correa Riera.

You may conduct business at a location outside of your home on occasion, but your home should be your main business location.

Additionally, you can deduct expenses for a free-standing structure that you use exclusively and regularly for your business—like a garage, barn or studio.

Determine a Home Office Tax Deduction Method

There are two ways to apply the home office tax deduction. The IRS refers to these options as the simplified option and the regular method.

Simplified Option

“With the simplified option, entrepreneurs may deduct $5 per square foot for the space used in the home by the business,” says Correa Riera. “This method is limited to a maximum of 300 square feet of space.”

This results in a maximum deduction of $1,500.

As its name suggests, the simplified method is fairly easy to calculate, says Christopher Haas, founder of Haas & Sons Electric. He works from a home office.

“For me, the simplified version works best. It’s much easier to figure out and requires less paperwork to sort through and store,” says Haas. “The write offs have helped me balance my earnings and expense report, therefore paying fewer taxes at the end of the year.”

If you find it difficult to keep records of all the various expenses involved in having a home office, then the simplified option may be your best option, according to Dillard.

“You might miss out on some deductible expenses, but it will save you time figuring out what you can claim and make record-keeping much easier,” she says.

Regular Method

With the standard method, the home office deduction is based on the percentage of your home used for business, which is measured against actual expenditures. This allows you to deduct a portion of your mortgage interest, taxes, utilities, insurance, maintenance and repairs and other expenses.

“Let’s say you have a 1,000-square-foot home and your office is 100 square feet, or 10 percent of the total area,” says Haas. “You could write off 10 percent of your electricity, waste, heat, gas, water, etc.”

“Using the regular method for home office deduction also allows a depreciation deduction for the percentage of the home used for the business’s activities,” says Correa Riera. “It’s important to note, however, that a depreciation deduction may lead to possible capital gains issues when the home is sold or otherwise disposed of.”

The regular method requires that you keep detailed records substantiating the expenses that make up the home office expense deduction, in case of an audit.

“It’s also important to note that the overall home office tax deduction is capped at the income earned from the specific business,” notes O’Connor. “That means the deduction can’t be used to generate a loss.”