As we previously reported, Scientologist Matt Feshbach and his investors sold their Okyanos Heart Institute in the Bahamas sometime in 2017. Okyanos having been sold, Matt Feshbach next ran into a brick wall with the US Tax Court when it ruled that he could not discharge in bankruptcy the $3.8 million in back taxes he and wife Kathy owe the IRS.

The Feshbach’s are appealing this matter. Not one to let $3.8 million in back taxes get in his way, however, Matt Feshbach has once again resurfaced in the stem cell therapy business. His new firm is called Ambrose Cell Therapy LLC. Based in Dallas, Texas Ambrose filed as an LLC on August 18, 2017.

There is a stampede to get into the stem cell therapy business in Texas since the 2017 passage of “Charlie’s Law” (HB 810) which allows chronically and terminally ill people the right to opt for non-FDA approved treatments with adult stem cells. In her article published at medium.com Dr. Kirsten Matthews,  a Fellow in Science and Technology Policy at Rice University’s Baker Institute for Public Policy, reported on Charlie’s Law:

In the 2017 Texas legislative session, which ended on May 31, the state lawmakers passed a new bill to expand the state’s ‘Right to Try’ law — H.B. 810, also known as “Charlie’s Law.” The new law, which takes effect September 2017, allows patients who are chronically ill access to experimental stem cell-based interventions (SCBI) and permits clinics to charge patients for their ‘costs.’ While the law seems like a huge win for patients, it might also hurt the same people it is trying to help by reducing their protections. In contrast, the new law does place the state of Texas in a position to more readily regulate clinics providing experimental SCBIs, closing down those which are fraudulent.

In an article published in the Texas Heart Institute Journal, Dr. Iltis and I describe the risks associated with unregulated clinics offering unproven or experimental SCBI. The new Texas law would essentially circumvent the US Food and Drug Administration (FDA) and their Expanded Access Program (EAP), which regulates clinical trials and access to experimental therapies. It also bypasses many of the required ethical and informed consent rules required by the FDA…

Dr. Matthews and her colleagues noted in their recent paper:

Born of the expectations and hype associated with stem cells and regenerative medicine over the past two decades, there are now numerous clinics around the world selling stem cell-based interventions (SCBI) that have yet to be proven effective or safe, with little to no accounting of the outcomes being collected. SCBI treatments might hold the key to help patients, but they also have serious risks of side effects, including graft-versus-host disease, unintended harm, and even cancer. Clinics are charging exorbitant prices, some for more than $20,000 per treatment.

Given the potential size and money to be made in this market, there was a big push to pass Charlie’s Law by those people and companies in Texas that stood to financially benefit by operating stem cells clinics.

Prior to the passage of Charlie’s Law, there was a great deal of lucrative stem cell medical tourism being enjoyed by Mexico, Feshbach’s Okyanos Heart Institute in the Bahamas, and many other clinics outside the US. These non-US clinics do not have FDA approval for the procedures they sell and deliver nor do they require such.

Charlie’s Law allows Texas to compete with these non-US clinics by offering non-FDA approved treatments to the chronically and terminally ill. Charlie’s law also significantly limits the liability of the doctors and providers that deliver these non-FDA approved procedures.

The logic of Charlie’s Law is that if someone is in chronic pain or dying then they have a right to try non-FDA approved adult stem cell treatments. The extremely specific and narrow focus of Charlie’s Law shows it to have been the result of intense lobbying by a specific group of people with a vested interest in adult stem cells.

These people include former Texas Governor Rick Perry whose wife Anita Thigpen Perry serves on the Board of Directors of Celltex Therapeutics Corp of Houston, Texas. In 2017, Rick Perry earned $175,000 as a consultant to Celltex. The company itself moved its operations to Mexico in 2013 after failing to comply with several issues raised by the FDA. Rick Perry was confirmed by the Senate as the US Secretary of Energy in the Trump Administration.

EMBRYONIC STEM CELLS VS. ADULT STEM CELLS

One of the key distinctions to understand in stem cells is the difference between embryonic stem cells and adult stem cells. An excerpt from the National Institutes for Health:

Human embryonic and adult stem cells each have advantages and disadvantages regarding potential use for cell-based regenerative therapies. One major difference between adult and embryonic stem cells is their different abilities in the number and type of differentiated cell types they can become. Embryonic stem cells can become all cell types of the body because they are pluripotent. Adult stem cells are thought to be limited to differentiating into different cell types of their tissue of origin.

Embryonic stem cells can be grown relatively easily in culture. Adult stem cells are rare in mature tissues, so isolating these cells from an adult tissue is challenging, and methods to expand their numbers in cell culture have not yet been worked out. This is an important distinction, as large numbers of cells are needed for stem cell replacement therapies.

Embryonic stem cells can differentiate into any structure in the body. However, embryonic stem cells can only be harvested from embryos. These embryos are donated by women who have frozen and stored them with fertility clinics for the purpose of in vitro fertilization (IVF) procedures. Following successful IVF procedures, many women wish to donate the frozen embryos they will not be using to the service of science. This practice naturally raised moral concerns in the American Religious Right. As a result, Federal laws enacted under the G.W. Bush Administration placed wide-ranging medieval and anti-scientific restrictions on stem cell research. For this reason, Charlie’s Law does not allow embryonic stem cells to be harvested or used in treatment.

Adult stem cells are harvested from the belly fat around an adult’s stomach. This fat is called adipose tissue. Thus, a patient becomes his or her own stem cell donor. Essentially, belly fat is extracted using liposuction or other means and then centrifuged in order to harvest stem cells. These stem cells are injected back into the patient’s body to treat various conditions. Unlike embryonic cells, however, adult stem cells cannot differentiate into any structure. This is one of the issues that make the many promises offered by adult stem cell therapy treatment providers so controversial.

THE FDA & STEM CELLS

Bianca Castro of NBC Dallas-Fort Worth reported in May 2018 on Federal prosecutors filing injunctions against stem cell treatment clinics:

Federal prosecutors in California and Florida filed injunctions on Wednesday to stop two companies from providing stem cell treatments, alleging the clinics marketed their procedures as remedies for ailments including cancer and heart disease without proof of safety and efficacy, according to this statement from the Food and Drug Administration.

The firms put consumers at risk by promising benefits from treatments and products never approved by the FDA, the Justice Department alleged in court filings in both states.

The filings target two companies, one of which is affiliated with Innovations Stem Cell Center of Dallas.

But now, the FDA is filing a lawsuit to stop these kinds of stem cell therapies.

The FDA says they’re not approved because they haven’t been proven to be safe and effective…

The Cell Surgical Network released the following statement regarding the lawsuit:

The Cell Surgical Network (CSN) intends to vigorously defend the lawsuit filed today by the U.S. Department of Justice on behalf of the U.S. Food and Drug Administration. CSN strongly rejects the idea that a person’s own cells should be regulated by FDA as a drug. On behalf of all Americans, we look forward to protecting patients’ rights and the physician-patient relationship. We share FDA’s concern for patient safety, but do not believe that FDA regulation of a surgical procedure that simply harnesses the healing power of a patient’s own cells, without altering the biological characteristics of those cells, is the answer. The decision of whether or not the surgical procedure is performed should be made by the patient and physician – not the FDA or any other arm of the federal government.

The Cell Surgical Network is an industry trade group that is attempting to set accreditation standards and make adult stem cell therapy a legitimate form of medical practice. To accomplish this goal, stem cell treatment providers, at present, need be excluded from FDA requirements. Stem cell advocates are trying to do this, in part, by arguing that a person’s own stem cells cannot be regulated as a drug by the FDA. Yet this argument is specious inasmuch as stem cell providers are extracting adipose tissue and extracting stem cells for the express purpose of medical treatment.

Adult stem cell providers want it both ways: They want to claim that their treatments are efficacious in treating a wide variety of medical conditions, and, they want to practice medicine without FDA approval. In this sense, these stem cell treatment providers are following the same story arc as anti-vaxxers: People should be allowed to make their own medical decisions and damn the science, dangers, and governmental restrictions.

Stem cells are classified as a drug under the FDA’s definition of a drug:

The Federal Food Drug and Cosmetic Act (FD&C Act) and FDA regulations define the term drug, in part, by reference to its intended use, as “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease” and “articles (other than food) intended to affect the structure or any function of the body of man or other animals.” Therefore, almost any ingested or topical or injectable product that, through its label or labeling (including internet websites, promotional pamphlets, and other marketing material), is claimed to be beneficial for such uses will be regulated by FDA as a drug. The definition also includes components of drugs, such as active pharmaceutical ingredients.

Stem cells are intended for “use in the diagnosis, cure, mitigation, treatment, or prevention of disease” and are therefore properly classified as drugs. Stem cell treatment providers want to circumvent this definition and Charlie’s Law represents one such attempt. The litigation expected to arise from Charlie’s Law will test the legality of this particular piece of legislation. To argue that a dying person should be allowed to do whatever they want ignores the larger moral question: Should stem cell opportunists be allowed to exorbitantly profit from the desperation of the chronically ill and the dying by selling them non-FDA approved treatments? Another question: Do the chronically ill and the dying have the mental capacity to consent to spending large sums of money on unproven treatments? Or are they being driven by irrationality in their great suffering and mortal fear?

MATT FESHBACH, MUDHAR SHAWKAT, AND BOB DUGGAN

That Matt Feshbach is promoting stem cell therapy is old news; he first began investigating stem cells in 2009. His fellow Scientologist Ali Shawkat was the “angel investor” whose money funded Okyanos. From an article at Finsimes.com in 2014:

Okyanos Heart Institute, a Freeport, Bahamas-based developer of advanced coronary artery disease treatments, said it raised $8.9m in its Series B funding.

According to a written note, the round was led by Passion Group founder Ali Shawkat.

Passion Group’s single page website describes what the group is and does:

Ali Shawkat and his wife Noor and into the Scientology IAS for at least $10,000,000 USD based upon this particular IAS trophy:

Shawkat’s father Mudhar Shawkat — a former member of the Iraqi Parliament — is detailed in the Panama Papers. The entry on Mudhar Shawkat in the Panama Papers describes his activities and, in the final paragraph, alludes to the Shawkat’s investment in Feshbach’s Okyanos Heart Institute:

According to 2008 confidential emails, the lawyer representing Shawkat and his son, Ali, asked Appleby to hold in escrow about $140 million, the proceeds of the sale of the Shawkats’ shares in a joint venture with a Kuwaiti telecommunications company. The law firm refused that request but accepted them as clients later in 2008.

Appleby set up the Passion Group Trust for the benefit of Mudhar Shawkat’s family members and registered three affiliated companies in the British Virgin Islands in 2008 and 2011, according to the files. Shawkat was identified in the Appleby documents as an “additional settlor” (a person who creates and funds a trust) of the Passion Group Trust and as a shareholder of Passion Investment Ltd., the trust’s investment arm.

However, upon the incorporation of a not-for-profit entity, which was also a beneficiary of the trust, concerns about the Iraqi family’s reported association with Chalabi emerged at the law firm. “It is suspicious,” an Appleby employee wrote in an email, “that they are setting up a charitable company offshore [Passion for Change S.A.] for funds coming out of Iraq – there does not seem any benefit other than lack of accountability in doing so.” But Appleby continued to provide services to Shawkat and his family after the firm’s managers noted that, other than accusations of favoritism in the award of government contracts, there were no allegations against Shawkat.

In the following months, in 2009, the leaked files show that the Shawkats transferred more than $30 million to the family trust and one of its affiliated companies, some of which was converted into shares. Board meeting minutes of Passion Investment Ltd. chaired by Shawkat’s son show that from 2013 to 2016, the company has invested in two medical companies and in an Iraqi dealership for Peugeot cars.

Mudhar Shawkat and his Scientologist son Ali Shawkat are connected to Matt Feshbach via the Shawkat’s Passion Investments Ltd., Passion Group, and Passion Trust.

We have also previously shown that Scientology billionaire Bob Duggan and another Scientology OT named Michael Holstein are connected to the Shawkat’s Passion companies as shown in the Panama Papers. The Shawkats and Bob Duggan are linked via a company called Genuine First Aid International:

Matt Feshbach’s new Ambrose Cell Therapy is worth documenting here at the Scientology Money Project for three reasons:

1. Matt Feshbach filed for bankruptcy and is trying to discharge $3.8 million USD he owes in back taxes. Feshbach told the bankruptcy court and the US Tax Court that he has no money and virtually no income.

2. In September 2008, the Fessbach’s made an Offer in Compromise (OIC) to the IRS to settle their 2001 tax debt of $3.6 million for $120,000, this to be made in payments over 48 months. The IRS declined the Fessbach’s unreasonable offer to settle for pennies on the dollar of the amount owed.

Judge McEwen of the US Tax Court wrote:

3. Given Matt Feshbach’s financial position we must ask where the money for his new Ambrose Cell Therapy LLC came from. Is it more Shawkat money? Or has Feshbach found other investors? While Bob Duggan has invested in two pharmaceutical companies, we personally cannot see Duggan investing in stem cells as, unlike pharmaceuticals, the science and the FDA approval process is not there. Duggan became a billionaire by complying with scientific protocols and the FDA approval process when he was the CEO of Pharmacyclics. Of course, we could be wrong. Other smart investors and institutions are putting money into stem cell companies. Perhaps most notably Texas A&M has signed a deal with Celltex Therapeutics Corp. for “a multiyear agreement for research into potential Alzheimer’s therapies.”

Matt Feshbach has a talent for reinventing himself. It remains to be seen if his once legendary talent for making enormous sums of money remains: Can Matt make lightning strike twice?

Ambrose Cell Therapy LLC filing from the Texas Secretary of State’s Office. Note: Please hover your cursor over the document to invoke the page up/page down and size controls at the bottom of the page frame.

Dr. Kirstin Matthews and her colleagues Bhavana Kunisetty and Keri Sprung discuss Charlie’s Law (HB 810). Note: Please hover your cursor over the document to invoke the page up/page down and size controls at the bottom of the page frame.