Feds Prosecute Amniotic “Stem Cell” Scammer

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Soft focus image of a empty hall of jail cells with the text: Missouri Clinic Who Claimed That Amniotic Fluid Had Stem Cells Is Charged by a Grand Jury With Fraud

Several years ago I raised the alarm that manufacturers and gullible physicians were claiming that Amniotic and Umbilical Cord products were loaded with stem cells were in fact, committing consumer fraud. Like anything, it’s taken years for this reality to sink in, but now the Feds have charged a Missouri woman with fraud for doing just that. Let’s dig in.

Amniotic and Umbilical Cord “Stem Cell” Scams

The manufacturers of these products usually take Amniotic membrane, fluid, Cord Blood, or Wharton’s Jelly and process/bottle it. Given that nobody in their right mind would pay the 1-2K USD a bottle this stuff normally fetches, the manufacturers began to tell physicians that this stuff was really loaded with stem cells. That was completely untrue, which has now been confirmed by multiple labs including ours. That message got passed onto consumers, which is fraud.

I’ve been sounding this alarm since about 2015. More recently we’ve seen some action from state medical boards and state attorney generals. However, most of that has been around the idea that these scammer clinics are offering to treat serious diseases with birth tissues and making claims of miracle cures without any data to back that up. We have yet to see a case where the main focus was that these products are billed as having stem cells but contain no live and functional stem cells. Why?

Prosecutors want something easy. They don’t want to have to bring medical experts like myself or others in to explain to a jury why these products contain no stem cells. They don’t want to have to show lab data that backs that up. Hence, they usually go for the easy win, which is that these clinics make treatment claims they can’t back up.

To learn more, see my video below:

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The Case of a PA Who Claimed that an Acellular Tissue Had Stem Cells

This case involves Patricia Derges, a Missouri woman who had actually attended a Caribbean medical school, but who could never get into a US internship or residency program. Hence, she never completed enough medical education to get a medical license. Hence, she applied for and received a physician’s assistant license in that state. She then proceeded to open “Ozark Valley Medical Clinic”.

Derges began offering “stem cell therapy” at these clinics and had a website that stated that she was, “The LEADER in PAIN & REGENERATIVE MEDICINE in SOUTHWEST MISSOURI SINCE 2014.” As I’ve written before, clinics making these “Best” and “Greatest” claims like this without any horsepower to back that up are common. In fact, they should be your first clue that something is amiss.

This next part is from the complaint:

“15. “DERGES’ “stem cell” practice was to administer amniotic fluid to her patients by
various techniques, including, injection, intravenously (IV), and nebulizer.

16. DERGES marketed her “stem cell” practice through seminars she titled “STEM
CELL EDUCATIONAL SEMINAR.” For instance, in an August 20, 2019, “stem cell educational seminar,” DERGES told her audience that the amniotic fluid she used in her stem cell practice was a “stem cell shot” and that it contained “mesenchymal stem cells.” 

So she claimed that the Amniotic fluid product that she was using had mesenchymal stem cells. The problem? Well, Federal prosecutors found out that the product she was buying wholesale came from the University of Utah. That fluid was billed by the university as a sterile filtered fluid, meaning it was acellular. In other words, it had no living cells nor living stem cells.

Ultimately Derges became a distributor for this product and founded a company called “Regenerative Biologics”. Derges then made her fate worse by actually complaining to the university in emails about a competitor at a Las Vegas trade show who was claiming that their product had stem cells. Again, from the complaint:

“On August 25, 2019, DERGES wrote to J.P. concerning another amniotic fluid provider’s literature: “I noted that they actually listed the #’s of how many [mesenchymal stem cells] and other products, including naming the main cytokines inside their [amniotic fluid], do we have any of this on ours or how should I answer if someone at the shows ask?” In an August 26, 2019, e-mail, J.P. responded to DERGES, “Our product is acellular so it doesn’t have any [mesenchymal stem cells.]” 

However, that didn’t stop Derges, who then told physician buyers at the trade show and her patients that the Amniotic fluid had stem cells. The straw that broke the Camel’s back and got federal prosecutors involved was when Derges began offering stem cell treatments for COVID-19.

Now Derges, having been charged by a Grand Jury, if convicted, is facing decades in federal prison.

The Moral of this Story

I’ve been saying for years that the data shows that these products have no live and functional stem cells and that clinics that were claiming otherwise were involved in consumer fraud. Now we have our first case where federal prison is one likely outcome for a clinic operator who made that claim. My only question is “Who’s next?”

I suspect what we’ll see, is that manufacturers and clinic operators will now change their tune away from the idea that these are stem cell products. However, they have painted themselves into a legal corner. Meaning that I would also imagine many patients coming after these clinics through state fraud units about their prior deception.

The upshot? As I always say, you can’t make this stuff up. I’ve been warning for years that this would happen and now we’re here. How many more clinic owners will end up with federal charges? Time will tell.

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Chris Centeno, MD is a specialist in regenerative medicine and the new field of Interventional Orthopedics. Centeno pioneered orthopedic stem cell procedures in 2005 and is responsible for a large amount of the published research on stem cell use for orthopedic applications. View Profile

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