Appeals Court Upholds Conviction of Device Importer CEO for False Statements
The U.S. Court of Appeals for the 10th Circuit on Jan. 21 upheld the conviction of the Chief Executive Officer of a medical device importer for making false statements to Food and Drug Administration officials. George John Schulte had been judged guilty by a Colorado U.S. District Court jury in March 2012 of lying to FDA officials to cover up his role in a scheme to test imported medical devices on human patients before they were granted FDA approval.
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Schulte was the CEO of the Colorado device company Spectranetics from 2003 to 2008. Seeking to expand its product line, Spectranetics began negotiations to bring to the U.S. market two foreign medical devices: a guidewire used to puncture through severe artery blockages, made by Future Medical Design (FMD) in Japan; and a balloon angioplasty catheter to be placed in an artery to remove blockages, made by Bavarian Medizin Technologie in Germany. Although neither device was approved by FDA for distribution in the U.S., Schulte gave the devices to several doctors in an effort to gauge their effectiveness before applying for FDA approval. The devices were placed in several patients.
When FDA officials came to investigate after several former employees and one current employee alleged misconduct, Schulte denied knowing that the devices would be tested in human patients before FDA approval. The FDA agent didn’t believe him, and had Schulte sign a statement that he understood that false statements carry a potential five-year sentence. Schulte told the agent that he didn’t want to change any of his statements.
But later that day, he contacted Spectranetics’ chairman. According to the chairman, Schulte was distraught because he had reviewed his emails and realized his statements to FDA were not accurate. “It was incredible to me that one needs to review their emails to know whether they were knowledgeable of the facts,” the chairman later testified. According to the chairman, Schulte changed his story from not knowing about the misconduct to claiming unapproved testing of devices is common. But the chairman testified that he had “never encountered it before in [his] 50 years in the medical device industry.” Schulte later sent FDA three letters correcting his statements to the agent.
In March 2012, the district court jury convicted Schulte of false statements to the FDA agent. It acquitted him on all other counts, including receiving illegally imported merchandise and introduction into the U.S. of adulterated or misbranded devices. The court sentenced Schulte in May 2012 to one year of probation and a $5,000 fine.
On appeal, Schulte told the 10th Circuit that the government didn’t prove he intentionally lied. But the appeals court found the evidence backed up the jury’s finding that Schulte knew his statements were false. An “abundance of evidence” contradicted Schulte’s faulty memory, said the 10th Circuit.
(U.S. v. Schulte, 10th Cir. No. 12-1239, dated 01/21/14)