Prosecutors began their investigation after several U.S. employees of Swiss-based Serono claimed fraud.

"...president of a medical device company was sentenced Wednesday to three years probation and fined $10,000 for plotting ..."


Serono and its U.S. subsidiaries agreed in October 2005 to pay $704 million to resolve civil and criminal charges.




Executive sentenced in Serono fraud case
By Jay Lindsay, Associated PressWriter09.25.2008
Categories AP Business Business & Finance conspiracy Corporate management Court Proceedings crime Drug approvals General news Government and politics health Medical equipment and supplies manufacturing Technology Weight loss technologies
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The president of a medical device company was sentenced Wednesday to three years probation and fined $10,000 for plotting with Swiss-based Serono Laboratories to increase sales of an AIDS drug by manipulating a test for AIDS patients.

Rudolph Liedtke, president of Michigan-based RJL Sciences, pleaded guilty to conspiracy in 2005 for making and selling a software package in a device that Serono used to diagnose AIDS "wasting," an often fatal condition involving severe weight loss.

Prosecutors said the device diagnosed wasting even without weight loss so that Serono could increase sales of its drug Serostim. Demand for the drug had dropped in the late 1990s with the advent of "cocktails" of AIDS drugs that prevented wasting.

After Liedtke's cooperation with federal authorities, Serono and its U.S. subsidiaries agreed in October 2005 to pay $704 million to resolve civil and criminal charges.
On Wednesday, prosecutors asked U.S. District Judge Edward Harrington to sentence Liedtke to a prison sentence of just less than 3½ years. But Harrington refused, citing the case of Dr. Norma Muurahainen, who worked as a medical director for Serono and pleaded guilty to disseminating an adulterated device, but does not face prison time.

"(Liedtke) cooperated for three years. The other person, who in my judgment is equally culpable, did not," Harrington said. "It would have been a gross disparity to give him 41 months while the doctor walks."

Liedtke, 67, and his attorney, Robert Kalec, declined comment after the hearing. Assistant U.S. Attorney Mary Elizabeth Carmody and U.S. Attorney Michael Sullivan declined comment.

As part of the plea deal, prosecutors had originally agreed to a shorter sentence than they recommended Wednesday. But Carmody said that after Liedtke pleaded guilty in April 2005, he continued selling his company's device, which had not been approved by the Food and Drug Administration.

"Our position before the court would be different had he not continued the crime after he had pled guilty," Carmody said. "How does society tolerate, how does the court tolerate this kind of behavior? How does the court know that this defendant is not going to walk out the door and do it again? That is his history."

Kalec said he couldn't justify what his client did after his guilty plea. But he said that Liedtke's wrongdoing "paled in comparison" to others in the case, and added his company's profits were minuscule next to Serono's. He argued that without Liedtke's extensive cooperation with prosecutors, Serono would not have agreed to the huge penalty, the third-largest recovery in a health care fraud case in U.S. history.

Kalec asked Harrington to sentence Liedtke to probation, arguing that Carmody's concern that Liedtke would repeat his crime was unfounded.

"How do we know he won't go out and do it again? If he's on probation, the court continues to have a hammer over his head to ensure that he doesn't," Kalec said.

In brief comments before the court, Liedtke apologized for continuing to sell the device after his guilty plea.

"I'm just very, very sorry," he said.

Serono began marketing Serostim in 1996. But demand for the drug fell off sharply in the late 1990s after"cocktails" of AIDS drugs that made patients less susceptible to wasting hit the market. Serono then conspired with RJL Sciences to create a market for Serostim by selling a software package called SomaScan, which was used to diagnose AIDS wasting, but was not approved by the Food and Drug Administration for that use.

The cost of many of the prescriptions for Serostim, $21,000 for 12 weeks of treatment, was paid by Medicaid. Prosecutors began their investigation after several U.S. employees of Swiss-based Serono claimed fraud.
Serono paid a criminal fine of $136.9 million and civil penalties of $567 million, and pleaded guilty to federal conspiracy charges.

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AP Legal Affairs Writer Denise Lavoie contributed to this report from Boston