Avon Lake doctor indicted by feds in alleged clinical trial scheme

CLEVELAND — An Avon Lake doctor is among eight people recently charged by federal authorities with falsifying records related to clinical drug trials and in the process defrauding multiple drug companies and the Food and Drug Administration. John Panuto, 60, was named in a 19-count, 60-page indictment on charges of conspiracy to commit mail and wire fraud, mail fraud, wire fraud, aggravated identity theft, conspiracy to defraud the United States and failure to maintain adequate records. Panuto is an allergy and immunology specialist with a primary location in North Olmsted. He also is affiliated with University Hospitals Elyria Medical Center and UH St. John Medical Center in Westlake, according to online profiles. Panuto was arraigned in U.S. District Court for the Northern District of Ohio on Aug. 14. He pleaded not guilty and was released on $50,000 unsecured bond, according to federal court records. Also charged were Walter O'Malley, 39, of Brunswick; Daniel Gwin, 43, of Lakewood; Amie Demming, 44, of Strongsville; Brent Smith, 45, of Willoughby; Debra Adamson, 67, of Spring Hill, Tennessee; and Ashley Nichole Adamson, 34, and William Adamson, 38, both of Las Vegas, Nevada. The investigation that led to the charges was conducted by the FDA's Office of Criminal Investigations. "These defendants are accused of subverting a process that ensures pharmaceutical drugs are safe and effective for public consumption," U.S. Attorney Justin Herdman said. "By doing so, and for the sole purpose of making more money for themselves, these defendants jeopardize the health and safety of the public." According to the indictment, from January 2013 to March 2018, the defendants participated in a scheme to defraud pharmaceutical companies and the FDA through Clinical Research Solutions, a clinical research company founded by Demming in 2008 to conduct clinical trials for drug companies. The office had locations in Middleburg Heights, Ohio, and Franklin and Smyrna, Tennessee. Panuto was a licensed medical doctor and the principal investigator for the research company at the Middleburg Heights office and was responsible for the oversight of most clinical trials conducted at that office, federal authorities said. The defendants allegedly entered into agreements with these pharmaceutical companies, or sponsors, to conduct clinical trials of pharmaceutical drugs for public consumption. In order to perform these trials accurately, the research company was required to meet all applicable FDA regulations and other standards set by the sponsoring agencies. The defendants allegedly broke the law by enrolling subjects in clinical trials under fictitious names, enrolling past subjects without their knowledge and enrolling other subjects who did not meet pre-established criteria. In addition, the defendants allegedly fabricated and falsified medical records, consent forms and other documentation for fictitious study subjects. Court documents show the defendants were able to enrich themselves in this scheme by billing the sponsoring agencies for the time and participation of these allegedly fictitious subjects. This bypassed the FDA's oversight of clinical studies. In response to complaints from sponsoring agencies, the FDA conducted an investigation into the research company and found that Panuto allegedly had violated clinical trial criteria by failing to conduct studies in accordance with signed statements and failing to maintain adequate records. According to federal court records, Panuto received $1,200 per month from February 2014 through February 2016 as the company's medical director. "Depending on the particular study, the sponsors paid (Clinical Research Solutions) anywhere between approximately $4,952.75 and $32,875.00 for each successful study subject," according to the indictment. The company then paid individual study subjects with "ClinCards" — prepaid, reloadable debit cards issued to the study subject and loaded with anywhere from $25 to $500 per office visit and $390 to $1,800 for completing clinical investigations, authorities allege. Clinical trials included the study of fibromyalgia and asthma drugs. In October 2017, FDA inspectors found that Panuto did not properly conduct studies as planned, did not have adequate drug distribution records showing their quantity and use and did not keep adequate case histories of study participants.