Thursday April 5, 3:51 pm Eastern Time
Ives Health founder charged in AIDS drug scheme
By Gail Appleson, Law Correspondent
NEW YORK, April 5 (Reuters) - The founder of a company that recently began selling what it touted as a breakthrough AIDS medicine has been arrested for allegedly making false claims about the product and defrauding the FDA, federal prosecutors said on Thursday.
M. Keith Ives was arrested by the FBI in Oklahoma on Wednesday on a two-count complaint filed in Manhattan federal court. The complaint charges him and Ives Health Company with conspiracy and wire fraud. Claremone, Okla.-based Ives Health sells natural remedies and homeopathic medicines.
The complaint alleges that the defendants made false claims about the efficacy of the product, that they introduced the drug without getting Food and Drug Administration approval and that they defrauded the agency.
If convicted, Ives faces a maximum sentence of five years in prison on each of the two counts.
According to the complaint, Ives Health (OTC BB:IVEH.OB - news) issued a press release on Feb. 15 stating that its T-Factor formula was successful in increasing T-Cell cell counts in HIV patients.
The announcement, which was released on Business Wire, said that the results of ``this ground-breaking study come as Ives releases the drug, which has virtually no side effects, to the public on its website.''
The release quoted Ives, who is also the company's president as saying ``This is incredible news. There has been a revelation occurring in HIV healthcare that has linked T-Cell loss to immune system deficiency.''
LIFE SPAN INCREASE CLAIMED
The release said that the formula, which Ives acquired in 1998, could help increase HIV patients' life span. It said that although FDA-approved drugs cost more than $25,000 a year, an annual supply of T-Factor sells for $600.
The press release stated the product was based on a purported scientific research program known as the ``The Java Project'' that was supposedly conducted by Dr. Robert Slayton-Bedeen in association with the World Health Organization. The study was purportedly conducted in Jakarta, Indonesia.
Ives issued another press release on Feb. 19 again touting the product.
According to its web-site, T-Factor ``works by introducing highly active and effective thymus cells which trigger the chain reaction of events which cause an accelerated rate of T-cell manufacture.'' The product was said to contain "juvenile neonatal bovine calf thymus, pituitary gland, spleen, lymph gland and bone marrow.
The criminal complaint said an FBI agent interviewed Dr. Michael Merson, the Dean of the School of Public Health at Yale University, who had served as the Director of the World Health Organization's Global Program on Aids from 1978 to 1995. The doctor, who continues to research HIV prevention, said he never heard of Slayton-Bedeen, the Java Project or the T-Factor product. He also said that thymus glands, supposedly one of the main ingredients in the product, have never been found to be effective in treating AIDS or HIV to his knowledge.
On March 16 the Securities and Exchange Commission announced the temporary suspension of trading in Ives Health because of questions regarding the accuracy of the company's public statements. Even after the suspension, the defendants continued to post false and misleading information on Ive's website, the complaint alleged.
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