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On March 12, 2001, following a four-week trial, a federal jury convicted Thomas Ronald Theodore, of Forestdale, Massachusetts, on nine counts of mail fraud and three separate charges of violating the federal Food, Drug, and Cosmetic Act. On March 1, 2002, Theodore was sentenced to 121 months in prison followed by 3 years of supervised release, and was ordered to pay $1.5 million in restitution to his victims .
The evidence presented at the trial showed that between 1993 and 1995, Theodore and an Atlanta businessman (Thomas Rodgers, Jr.) solicited about $2 million of investments in a company called Private Biologicals Corporation (PBC) by claiming they they had invested a promising new drug called "LK-200." Investors were told that, because the drug was not FDA-approved, PBC had manufactured it overseas using a proprietary production method. At the same time, Theodore misrepresented himself as a medical doctor.
In reality, the substance Theodore called "LK-200" was not discovered by him but was simply a new name for a preparation that had been used in cancer research in the 1970s and 1980s and was produced through well-known and widely published techniques. Contrary to PBC's representations, it did not manufacture LK-200 abroad. At first he obtained it from the University of Pennsylvania Medical School by claiming it would be used only for research, but Theodore immediately shipped it to Mexico for injection into cancer patients. In August 1993, PBC began producing it in an unregistered laboratory in Woburn, Massachusetts. To disguise its place of manufacture, Theodore initially arranged to ship LK-200 to the Bahamas for re-shipment to the United States. But in August 1994, PBC employees began shipping it directly from Woburn while falsifying the shipping labels to reflect a Bahamas shipping address. These shipments continued until April 1995 .
In addition to misleading investigators about the claimed invention and supposed overseas operation, Theodore also violated the Food, Drug, and Cosmetic Act by manufacturing LK-200 under conditions that did not need FDA standards and by packaging an shipping it in unsanitary conditions that exposed it to contamination. His associate, Thomas Rogers, Jr., pled guilty to the FDA charges and was sentenced to one year of probation and ordered to pay a $10,000 fine.
The mail fraud violations involved Theodore's false claims for attracting investors, including posing as a physician and claiming to have a secret process for manufacturing the drug. The company folded in 1995, shortly after an FDA inspection alerted investors to the status of the company.
Theodore claimed to have received a medical degree from the Universidad Centro de Estudios Technologicos (CETEC). This school was listed in the World Health Organization Directory of Medical Schools, which enabled its graduates to sit for exams that permitted its graduates to enter postgraduate medical training and ultimately obtain legitimate medical licensure in the United States. But it was also involved in a diploma scam spearheaded by a man named Pedro de Mesones, who, between 1980 and 1983, helped more than 100 people obtain medical degrees from CETEC or another school (CIFAS) without actually having attended. Some of his clients reported starting dates at CETEC that predated the opening of the school in January 1980 . In 1984, the Dominican Republic closed CETEC after its dean, Mesones, and several associates were convicted in the United States and in the Dominican Republic of various mail-fraud offenses involving the fraudulent sale of degrees .
Based on his alleged attendance at CETEC, Theodore managed to get a Massachusetts license and obtained jobs at three Massachusetts hospitals. Theodore claimed that he had attended CETEC from January 1978 through December 15, 1980. But because CETEC had not opened to students until January 1980, his medical "degree" could not possibly have been legitimate. In 1987, he was convicted of mail fraud for falsely claiming to be a doctor and his license was revoked. However, he continued to assert that he had a valid medical degree .
The case was investigated by special agents of the FDA's Office of Criminal Investigations and was prosecuted by Assistant U.S. Attorneys Paul G. Levenson and Adam J. Bookbinder of U.S. Attorney Michael J. Sullivan's Economic crimes Unit.