RHONJ newcomer, Amber Marchese’s husband, Jim Marchese, has made headlines recently for his controversial past. As we previously reported, Jim is the owner of Mortgage Now, a mortgage lending company that was audited by the government, revealing the business had engaged in “questionable” business practices. Jim is also famous for his involvement in a huge a whistle-blower case involving a pharmaceutical company.
Here’s the back story on the whistleblower case. In 2002, Jim was employed by Cell Therapeutics, as a pharmaceutical sales rep. The Seattle, Washington based drug company develops therapies to treat and cure cancer, specifically, blood-related cancers.
Some time during Jim’s employment with Cell Therapeutics, he became aware that the company was using deceptive marketing tactics to promote a cancer drug and in doing so, defrauded millions out of the Medicare system. As a result, Jim reported his findings to the Food and Drug Administration and became a whistleblower aka a rat.
The feds investigated Marchese’s claims, uncovering layers of corruption within the company. Subsequently, Cell Therapeutics agreed to pay $10.5 million to the government to settle the charges which positioned Jim to collect the standard 25% whistleblower reward or $2.8 million.
Now here is where the story gets Messy!…downright Filthy!
During the feds investigation of Cell Therapeutics’ fraud, the US Justice Department discovered that their “star” whistleblower, Jim Marchese, was the mastermind of the scam (within the company), he accused Cell Therapeutics of.
The government alleged, Jim Marchese only reported the fraud AFTER 1) being overlooked for a promotion and 2) his firing from CTI. Jim was fired from CTI in September 2002 for causing the company to write checks that Marchese misrepresented as being for educational programs but CTI uncovered were illegal discounts to purchasers of its pharmaceuticals, i.e. illegal kickbacks.
Supposedly, when Jim did not get an expected promotion, he was livid and sent his Directors an angry letter. In the letter, Jim credits himself for performing the same fraudulent practices he accused his former employer (Cell Therapeutics) of doing.
Below is excerpt of an email Jim sent to his superiors after he was passed over for a promotion. He clearly states “the company still fails to meet ANY of the criteria set forth in compendia acceptance,” indicating he was aware the drug was not “approved” and could cause harm to cancer recipients:
Created and implemented a 100% successful compendia submission for MDS, MM, AML, CML. … NOTE: To date the company still fails to meet ANY of the criteria set forth in compendia acceptance [sic] for all of the aforementioned disease states. Without my ability to troubleshoot and find a [sic] alternate route we would not have compendia in any off-label disease for a minimum of 1-3 additional year[s]!!!
After that incident, supposedly, Marchese continued placing lives at risk and it wasn’t until he was FIRED in September 2002 for running an illegal kickback program (within the company) did he report Cell Therapeutics to the Food and Drug Administration in October 2002.
Shortly thereafter, Marchese hired an attorney who threatened to file suit for wrongful termination on the purported grounds that Marchese had been fired for expressing concerns over, “potential health risks from C.T.I.’s aggressive promotion of its drug Trisenox for indications that are not approved by the F.D.A.”
Here’s how Marchese allegedly aided his company in deceiving physicians/purchasers of the drug and Medicare:
The feds charged Marchese found a way to list unapproved uses of a cancer drug sold by Cell Therapeutics in a special Medical Bulletin used by physicians to select medicines to prescribe for various types of cancers. OMG!
Allegedly, Jim then wrote a letter to Medicare centers notifying them that because the uses were listed in the Medical Bulletin, CTI were eligible for reimbursement, when in fact the Food and Drug Administration hadn’t approved the uses, and therefore, they weren’t reimbursable.
After the feds determined Jim Marchese was culpable, they filed charges against him in an attempt to prevent him from receiving the full reward money. By law, whistleblowers such as Marchese are entitled to 25% of a settlement, although a court may reduce the share if it finds that the informer planned and initiated the scheme.
Government lawyers argued that Marchese is not entitled to any of the money because he planned the fraud and was not forthright about his role.
“If someone comes in to be a government informer, they need to be candid,” the government said in their closing argument.
The government’s case was extensive. Among the witnesses the prosecutors presented at trial was one of Marchese’s supervisors at Cell Therapeutics, Paul Cordella.
Cordella testified that in a restroom, Cordella asked Marchese how he managed to get the “unapproved” uses of the cancer drug listed in the bulletin.
According to Cordella, Marchese replied:
“Paul, you really don’t want to know. Cordella added, he was smiling, he was happy, he was looked at as a hero … for getting us in the bulletin.”
Upon receipt of the first batch of copies of the false and misleading Bulletins, Marchese sent an email on November 26, 2001, to his immediate supervisor at CTI, Peter Sportelli, which read:
How pretty are those Compendia bulletins!!! By the way – in case you did not notice, I worked another little loop whole [sic]. I figured what the Hell!!! If you notice the ACCC has us listed for EVERY form of Leukemia not just AML, CML and APL. * * * There is a ton of stuff in there I have never even heard of. If a state checks, we will only get our Orphan Drug and USP stuff, but my guess is that about 30-40% of the states will not check. Hey it can’t hurt and man do I like working the system. I figure if 1 state doesn’t check its [sic] a bonus!!
I got a kick out [of] this, I thought you might too. I figured if I told everyone inside they would raise our goal, so I kept it quiet until it came through. Plus I figured it was a good reminder that while I might not call you everyday that doesn’t mean I am not cooking up ways to make us VERY, VERY rich!!! I also think coming out with stuff like this keeps you guessing, hell I can’t let you think you have all my tricks down. I have a couple more I am working on so stay tuned.
In the end, the judge sternly admonished Marchese’s actions for not reporting the fraud sooner, knowing lives were at risk. Marchese was only awarded 15% ($1.6m) instead of the standard 25% whistle-blower reward. The judge acknowledged Marchese’s hands were not clean in the fraud.
The irony of the situation is, Jim’s wife, Amber was afflicted with breast cancer in her early 30’s. Fortunately for Amber, she received “ethical” meds/treatment and recovered. Contrary to the vulnerable cancer patients who put their trust in her hubby’s former employer.
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