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  1. Press Releases

Eight Charged in Scheme to Defraud FDA and Falsify Records Used in Clinical Research Trials

OCI BadgeDepartment of Justice
U.S. Attorney’s Office
Northern District of Ohio

FOR IMMEDIATE RELEASE
Friday, July 31, 2020

United States Attorney Justin Herdman announced today that a federal grand jury sitting in Cleveland has returned a 19-count indictment charging Amie Demming, age 44, of Strongsville, Ohio; John Panuto, age 60, of Avon Lake, Ohio; Debra Adamson, age 67, of Spring Hill, Tennessee; Ashley Nichole Adamson, age 34, of Las Vegas, Nevada; William Adamson, age 38, of Las Vegas, Nevada; Daniel Gwin, age 43, of Lakewood, Ohio; Brent Smith, age 45, of Willoughby, Ohio; and Walter O’Malley, age 39, of Brunswick, Ohio with conspiracy to commit mail and wire fraud, mail fraud, wire fraud, aggravated identity theft, conspiracy to defraud the United States, and failure to maintain adequate records.

“These defendants are accused of subverting a process that ensures pharmaceutical drugs are safe and effective for public consumption,” said U.S. Attorney Justin Herdman. “By doing so, and for the sole purpose of making more money for themselves, these defendants jeopardize the health and safety of the public.”

According to the indictment, from January 2013 to March 2018, the defendants are alleged to have participated in a scheme to defraud eight pharmaceutical companies and the U.S. Food and Drug Administration.  Defendant Amie Demming founded a clinical research company in 2008 to conduct trials on behalf of various pharmaceutical companies. The office had locations in Middleburg Heights, Ohio and Franklin and Smyrna, Tennessee. Defendant John Panuto was a licensed medical doctor and the Principal Investigator for the research company at the Middleburg Heights Office and was responsible for the oversight of most clinical trials conducted at that office.

The defendants and their co-conspirators are alleged to have entered into agreements with these pharmaceutical companies, or sponsors, to conduct clinical trials of pharmaceutical drugs for public consumption. In order to perform these trials accurately, the research company was required to meet all applicable FDA regulations and other standards set by the sponsoring agencies.

The defendants are alleged to have subverted these requirements by enrolling subjects in clinical trials under fictitious names, enrolling past subjects without their knowledge, and enrolling other subjects who did not meet pre-established criteria.  In addition, the defendants allegedly fabricated and falsified medical records, informed consent forms, and other documentation for fictitious study subjects.

Court documents show that defendants were able to enrich themselves in this scheme by billing the sponsoring agencies for the time and participation of these fictitious subjects.

As part of their scheme, the defendants are accused of circumnavigating the FDA’s oversight of clinical studies. In response to complaints from sponsoring agencies, the FDA conducted an investigation into the research company and found that Panuto had violated certain clinical trial criteria, such as failure to conduct studies in accordance with signed statements and failure to maintain adequate records.

An indictment is only a charge and is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

If convicted, the defendant's sentence will be determined by the Court after review of factors unique to this case, including the defendant's prior criminal record, if any, the defendant's role in the offense and the characteristics of the violation.

In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

The investigation preceding the indictment was conducted by the Food and Drug Administration, Office of Criminal Investigations.  The case is being prosecuted by Assistant U.S. Attorney Megan R. Miller.

Topic(s):
Health Care Fraud
Component(s):
USAO - Ohio, Northern
Contact:
Daniel Ball Daniel.Ball@usdoj.gov

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