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Thanks to many people working behind the scenes, Care To Live is able to monitor some of the formal investigations being pursued by the Federal government and others regarding the questionable actions taken against Dendreon since 2005. It is CTL’s position that some of the miscreants involved in the 2007 sabotage of the Provenge approval process are still keeping Dendreon on the ropes to this day.
Had Provenge been approved conditionally and humanely, as it should have been in May 2007—with a post-approval phase IV trial performed— it would have become, as it should be, the standard of care for end stage prostate cancer. Instead, approval was delayed three (3) years, with the concomitant loss of 100,000 lives, many of which could have been extended through the use of Provenge.
Despite the nearly insurmountable barriers placed in its path by Wall Street, together with corruption in the FDA approval process that has been well documented in the literature through the efforts of Care To Live and our many supporters (see, for example, the seminal piece by Mark Mitchell, Michael Milken and Dendreon* [ http://www.deepcapture.com/wp-content/uploads/story-of-dendreon.pdf ], Provenge has become the first and so far, only immunotherapy for cancer that the FDA has ever approved, making medical history for the good of all people.
Capping the egregious events that marked the Provenge Advisory Committee (AC) Meeting of March 29, 2007, and the events that followed—including the three letters to Dr. von Eschenbach written by Drs. Howard Scher and Maha Hussain (both of whom served as special government employees on the AC) and Dr. Thomas Fleming, a statistician — as well as the $440M deal between Novacea (for which Scher was conducting trials) and Shering-Plough just three weeks after the FDA sent Dendreon ‘back to the drawing board,’ was the Bear Raid on Dendreon’s stock on April 28, 2009. On that date, shortly before Dendreon was to announce (positive) material information, the stock dropped from $24.50 to $7.50 in 75 seconds. Importantly, the ‘flash crash’ was announced by a poster on the Dendreon Yahoo! message board known as ‘monthaphumchareon.’ (And seriously…75 years old and a female?)
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_D/threadview?m=tm&bn=5342&tid=708092&mid=708150&tof=-1&rt=2&frt=2&off=1
The April 28 “flash crash” bear raid was yet another example of sociopathic Wall Street manipulation, this time, perhaps, intended to allow traders and hedge funds caught in a trap on the ‘short side’ and facing good corporate news on the positive results of the Phase III Provenge trial to exit their positions and go ‘long’ ahead of Dr. Mitch Gold’s conference call. Even with the ‘smoking gun’—that is, the pre-announcement of the bear raid for which a subpoena could have been issued to obtain a person’s name—FINRA let all of the trades stand, and the SEC stood by doing nothing.
This is what passes for ‘oversight’ by our regulators of the US stock markets. Is it any wonder that Bernie Madoff pulled the wool over their eyes for 10 years? No wonder Harry Markopolos testified before the US Senate that the SEC was a ‘captured regulator’ controlled by the very industry it was commissioned to oversee.
Complaints to the SEC and FINRA by CTL and others resulted in no actions being taken. However, one supporter did catch the attention of Senator Chuck Grassley (R, IA), who demanded an investigation. The first hint of this came in the SEC OIG’s Semi-Annual Report to Congress in November, 2009:
http://www.sec-oig.gov/Reports/Semiannual/2009/semifall09.pdf text, page 98
Allegations of Failure to Investigate
The OIG has opened an investigation into complaints from an investor alleging that the SEC failed to investigate instances of market manipulation and other misconduct in connection with the review, and eventual nonapproval, of a developmental drug. The investor also has alleged that the SEC failed to investigate a recent bear raid on the stock of the company that developed the drug, causing a severe plunge in the stock price. The OIG has reviewed several hundred pages of documents, including numerous e-mails and attachments provided by the complainant. The OIG expects to complete its investigation and issue a report of investigation in the next reporting period.
This was followed by:
http://www.sec-oig.gov/Reports/Semiannual/2010/semiapr10.pdf text, page 73
Allegations of Enforcement Failure to Investigate (Report No. OIG-521)
“The OIG opened an investigation on August 6, 2009, after receiving an investor complaint from the office of Senator Charles E. Grassley (R-Iowa), alleging that a “bear raid” against a manufacturer that took place in 2009, resulting in a 65 percent drop in the company’s stock price within 75 seconds. According to the complainant, an Internet message board posting warned of the bear raid in advance of the precipitous fall in the stock price. The complainant further alleged that the SEC failed to investigate this bear raid, as well as additional instances of misconduct in connection with the review, and eventual non-approval, of a company product. The complainant also alleged that certain non-SEC government employees were responsible for serious improprieties in the product approval process and, due to conflicts of interest, should never have been allowed to participate in the process. The focus of the OIG’s investigation was to determine whether the SEC had, in fact, failed to investigate the possible manipulation of the company’s stock, in the form of a bear raid, as alleged.
“During the course of this investigation, the OIG reviewed numerous pages of correspondence and supporting materials provided by the complainant, including approximately 200 e-mails and many attachments thereto. The OIG also reviewed internal SEC case tracking reports for evidence of SEC investigative activity. Finally, the OIG interviewed the complainant, as well as two Enforcement staff members in an effort to determine whether there was an investigation into the alleged bear raid on the company’s stock.
“After conducting a thorough investigation into the complainant’s allegations against the SEC, the OIG issued its report to management on December 9, 2009. In the report, we determined that the SEC was, in fact, actively investigating the specific instance of market manipulation identified by the complainant, namely, the alleged bear raid against the company’s stock. We also determined that the complainant’s allegations that conflicts of interest tainted the product approval process were not within the OIG’s jurisdiction to investigate. Finally, the OIG provided Enforcement staff with the complainant’s numerous materials, and will continue to monitor the progress of Enforcement’s investigation of possible market manipulation related to the Internet message board posting.”
For well over a year, US news agencies and CTL have been attempting to secure a copy of both the Enforcement Division’s and the OIG’s formal Reports in this matter. Recently, we have been successful, and today, are able to provide you with the Report of Investigation by the SEC Office of Inspector General in the matter of OIG-521 and a response letter:
SEC Response Letter – OIG -521.pdf
SEC Report - OIG-521.pdf
There are several interesting things to note about this OIG-521, beginning with Footnote 6. This is a clear reference to Mark Mitchell’s DeepCapture article (really, an exposé of the heinous crimes committed). It is a ridiculous reference, and completely misstates fact. It’s almost as if the IG staff is laughing about what it has read in DeepCapture…assuming it even read the 15-chapter story. We suspect that either the OIG staffers deliberately misconstrued the story (unlikely) or took someone else’s word as to what was in the story and didn’t bother to read it themselves (more likely).
Now, we certainly wouldn’t expect that the OIG had time to read a book-length Internet story, but for them to suggest that the story suggests a dark Mafia conspiracy is irresponsible and suggests that the OIG isn’t taking seriously the broader allegations that Dendreon was manipulated over a long period of time. It doesn’t take a genius to look at the price action in Dendron’s common stock over the years together with the bombardment of false and negative information regarding the company and its lead product, Provenge, to know that the share price has been manipulated for quite some time for a number of reasons, both market related as well as of a competitive nature.
So, from the standpoint of Footnote 6, then, we are disappointed that once again, as in the case of Harry Markopolos, the SEC OIG (and the Enforcement Division?) has apparently chosen to ignore the warning signs and may be allowing this travesty to slip through the cracks.
Another very disturbing thing about the OIG-521 Report is the fact that despite repeated attempts to call attention to problems related to special government employees (and others) who participated in the Provenge Advisory Committee, the HHS OIG’s Dan Levinson has so far refused to open an investigation into these matters. Material has repeatedly been sent to him by individuals, Sen. Grassley, and the SEC OIG. Yet, a review of the HHS OIG Semi-Annual Reports to Congress reveal nothing in the way of an investigation.
It should be clear to even the most casual reader that the three-year delay in the approval of Provenge, a non-invasive, non-toxic immunotherapy, was, without question, intended to ‘buy time’ for other of drugs in development to push through trials and into the marketplace. Consider this quote from the Provenge AC of March 29, 2007, by Dr. Scher:
15 offer patients. So if I start thinking, am
16 I denying a potentially useful agent to men
17 who clearly need it, the answer is
18 unfortunately I don’t know. So I say well,
19 what if we think that this really should be
20 available, start thinking about the number
21 of agents that are currently under
22 development…
P. 321, Provenge Advisory Committee Meeting
It should be noted that Dr. Scher uttered these words as a special government employee at a time when he was serving as co-lead on the development of Asentar, Novacea’s drug for prostate cancer. (The trial was subsequently stopped when it was found the drugged was killing patients.) At this time, too, Dr. Scher had a relationship with Cougar Biotechnology, which not only was later bought out by Johnson & Johnson, but which recently received approval for what now is known as Zytiga. Even more interesting is the fact that in damning Provenge, both during the meeting and later, in his leaked letter to Dr. von Eschenbach, Dr. Scher admitted that he had no experience whatsoever with Provenge:
1 DR. SCHER: Personally I have no
2 experience with this agent, so I’d just like
3 to ask the clinicians who have used it, we
4 all understand the difficulties assessing
5 time-to-progression and how it does not
6 associate with survival as we are currently
7 measuring it.
P. 87, Provenge Advisory Committee Meeting
Finally, there is the question of whether or not the Enforcement Division is or has conducted an investigation into this matter. Repeated FOIA requests finally brought the (verbal) result that no formal Report similar to Report OIG-521 has been written by the Enforcement Division. It has been confirmed, however —again, through a recent FOIA request—that all of the material provided to Sen. Grassley and the SEC OIG (and, subsequently, to the Enforcement Division) does still exist, so at least we know that it has not been destroyed. Some readers of this Blog may recall that recently Matt Taibbi wrote about a whistleblower who revealed the following:
“Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – “Hey, chief, didja know this guy had two wives die falling down the stairs?” No more burglary sprees cracked when some sharp cop sees the same name pop up in one too many witness statements. This is a different world, one far friendlier to lawbreakers, where even the suspicion of wrongdoing gets wiped from the record.
“That, it now appears, is exactly how the Securities and Exchange Commission has been treating the Wall Street criminals who cratered the global economy a few years back. For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history.”
http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817
It didn’t take William Cohan long to call for the SEC to be shut down, something with which we couldn’t agree more:
“Thanks to Darcy Flynn, a longtime attorney at the Securities and Exchange Commission, we now have all the ammunition we need to do what should have been done years ago: terminate the SEC, with extreme prejudice, and in its place construct a new regulatory watchdog for Wall Street free of obvious conflicts of interest.
“Flynn’s courage has almost been lost in all the recent apocalyptic talk of earthquakes and hurricanes, but a few weeks back he did something remarkable. After raising concerns internally at the SEC last year — and getting nowhere — Flynn went public and alleged in a formal whistleblower complaint that for at least 17 years the SEC “followed a policy of systematically destroying documents” related to what are known as Matters Under Investigation, or MUIs, most of which were focused on possibly illicit or illegal behavior at Wall Street firms. MUIs are the first step in investigating a case that may lead to a formal SEC inquiry. Flynn alleged the MUIs were destroyed after the cases were closed when they should have been retained. He catalogued his complaints in a letter to Senator Charles Grassley, an Iowa Republican and the ranking member of the Senate Judiciary Committee. Grassley wrote to Mary Schapiro, the head of the SEC, asking her to respond to him about Flynn’s allegations by tomorrow. She hasn’t yet done so as of yesterday.
“In his letter to Grassley, Flynn alleged that the SEC had destroyed documents related to MUIs involving Bernard Madoff; Goldman Sachs Group Inc. (GS)’s trading in the credit-default swaps of insurer American International Group Inc. (AIG); “financial fraud” at Wells Fargo & Co. (WFC) and Bank of America Corp. (BAC); and “insider-trading investigations” at Deutsche Bank AG (DBK), Lehman Brothers Holdings Inc. (LEHMQ) and SAC Capital Advisors LP.
http://www.bloomberg.com/news/2011-08-30/one-more-reason-to-shut-sec-and-start-over-commentary-by-william-d-cohan.html
While the second OIG Semi-Annual Report to Congress states that the IG would continue to monitor this issue, the Report states that for now, it has closed this matter (p. 7).
Finally, we note that a considerable amount of material has been redacted at the end of the Report. This material was withheld in accordance with the third paragraph of the cover letter:
“Further, we are withholding certain information within OIG-
521 pursuant to 5 U.S.C. § 552(b)(7)(A), 17 CFR §
200.80(b)(7)(i). This exemption protects from disclosure
Information compiled for law enforcement purposes, the release
of which could reasonably be expected to interfere with
enforcement activities. Because the underlying circumstances
may change, we may later disclose some of this information. If
you wish, you may make another request six months from the date
of this letter.”
Whether or not actual “law enforcement” activities are ongoing is questionable. It’s been more than two years since the Bear Raid, and considering that the SEC was handed the smoking gun (the name of the person who preannounced the raid) and the fact that no sign of action has been forthcoming, we at CTL are skeptical that the Securities and Exchange Commission is capable of doing anything properly.
*Mark Mitchell’s seminal piece on Dendreon, Michael Milken and Dendreon, will be released this fall in book form. The tradeback (paperback) book will be entitled The Dendreon Effect: How Felons, Con-men and Wall Street Insiders Manipulate High-tech Stocks, from Silver Lake Publishing. Readers also may enjoy Theodore Jerome Cohen’s Death by Wall Street: Rampage of the Bulls, which is based on the Dendreon story. http://www.theodore-cohen-novels.com/deathbywallstreet.html
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