Reliable Security Information
The Rogue Company

Americans are used to helplessness when a corporation goes rogue. But what if you were actually helpless -- inert flesh tied to a table in a business plan run amok? Toay's post takes us to a small firm, one from the heart of the bioterror defense research industry.


Its name -- List Biological Laboratories in Campbell, CA.

To set the stage it is necessary to take readers back to a small newspaper article from November 2004.


From the Palm Beach Post:


"Two weeks after four Floridians were paralyzed with knockoff Botox, the laboratory that manufactured the botulinum toxin unhesitatingly sold its poisonous product to a federal undercover agent over the phone.


"Campbell, Calif.-based List Biological Laboratories didn't verify the buyer's identity or his made-up statements that the botulinum would be resold to research institutions, according to a federal search warrant affidavit obtained Thursday."


The FBI raided List, effectively halting the company's sale of botulinum toxin, apparently to anyone with a good story.


"Agents ... seized 'growing procedures,' computer records, customer lists and all List documents relating to Toxin Research International," reported the Post. Toxin Research International -- or TRI -- would turn out to be two scammers with a plan to resell botulinum toxin produced by List Biological Laboratories. Reused illegally as the popular Botox, it would poach into Allergan's effective monopoly on the drug in the United States and net a hefty profit.


The plan exploded when another Florida man named Bach McComb bought botulinum toxin from List. He then put himself and three patients in the hospital with botulism, a condition which would have killed all four had they not been sustained on ventilators.


Botulinum toxin, nature's deadliest poison, eats part of a key protein in human nerve endings. When this happens in very small doses, it removes frown lines.


When it happens in full blown botulism, the victim loses the ability to move, to smile, to even speak. Eyelids droop, become flaccid. Speech is slurred as the toxin eats at the synapses.


The body, turned to unresponsive meat, must be sustained by artificial means until the damaged nerve endings are slowly healed.


The four suffering from botulism were slabbed, kept alive in hospital by machines. The made-in-America product took them right to the edge of the abyss and gave them a good look down.


McComb, a doctor in Florida whose medical license had been suspended for overprescription of painkillers, had bought a 100 microgram vial of highly purified botulinum toxin -- a dangerous amount if incompetently used -- from List Biological Laboratories.


He injected himself and three others with aliquots taken from it in treatment for wrinkles. Three to four days later, he and his patients were on hospital ventilators for survival. McComb's girlfriend took the worst of it, needing six months on life support, saying in a videotaped statement for a criminal trial that her body wasted away until it was unrecognizable.


A scholarly paper subsequently published in the Journal of the American Medical Association described the poisonings as equivalent to "21 to 43 times the estimated human lethal dose by injection." The vial from which McComb took his injections was thought to contain enough material for 14,286 fatal doses.


But how did this get started?


The simplest of all motivations. Greed.


In 2003, two con-artists in Arizona in pursuit of profit in the anti-aging industry began ordering the most poisonous substance known fresh from List Biological, then a dedicated purifier of biochemicals and toxins used in counter-terror research.


Chad Livdahl and Zahra Karim had set up a series of shell companies in Tucson with the aim of acquiring botulinum toxin cheaply and repackaging it as "Mimic Botox."


The "Mimic Botox" would be shilled to cosmetic surgeons, fraudulently misrepresented as Botox, competing with Allergan's property, the only company that could sell Botox in the US as a trademarked and licensed drug. With more profit in the equation than purchase of Allergan's product allowed.


The scam worked.


Using the front company Toxin Research International, Livdahl and Karim ordered thousands of 5 nanogram vials of botulinum toxin from List Biological Laboratories sight unseen and promptly diverted it for resale to a collection of websites, as well as through anti-aging seminars.


Through this effective bit salesmanship, TRI established demand in the US's first botulinum toxin black market.


According to the US government's indictment (full text here), Livdahl and Karim paid List about $30,000 for the botulinum toxin shipment, subsequently making about one and a half million dollars in profit through the operation.


The plan came apart when McComb and his patients landed in the hospital. The FBI raided List. Livdahl and Kahrim were arrested, tried and convicted, getting nine and six years respectively, for fraud and misbranding a drug.


McComb pled guilty in 2005 to charges of administering unapproved drugs. He entered a Florida court using a walker, seemingly crippled from the side effects of botulism, according to a newspaper report. He was given three years in prison.


But although the government was looking to file charges against List Biological Laboratories, the company escaped the formal grasp of justice.


"Toxin Research International obtained the botulinum toxin from Campbell-based List Biological Laboratories, but investigators from the U.S. Food and Drug Administration could not establish that List had done anything illegal," reads a San Jose Mercury News article from 2006.


"List sells products designed to be used in scientific and medical research, and no charges were filed against the company."


The article outlined the US government's continued roll-up of clients and associates in the Toxin Research International network, revealing the hot demand for American black market Botox.


"In June, a New Mexico doctor was indicted on federal charges of fraud after giving the fake Botox to 120 patients," informed the newspaper. "Earlier this month, an Oregon doctor was sentenced to 18 months in federal prison for using two kinds of fake Botox, from Toxin Research International and a Chinese company, on more than 800 patients. An Idaho doctor also was sentenced to six months in prison in mid-December for using botulinum toxin from Toxin Research International."


Technically, List Biological Laboratories was part of the US government's select agent control regime. It is a program designed to prevent select agents -- like botulinum toxin or anthrax -- from getting into the hands of bad people.


However, there are no obvious laws preventing professional malfeasance
and escape from oversight with regards to the select agent program.


In all the news on the black market Botox incident, no employees from List Biological Laboratories appeared in the press. The person (or persons) at List who sold botulinum toxin to Livdahl, Karim and McComb were never identified. The corporate culture when the company turned rogue and its botulinum toxin production operation escaped from prudence, propriety, good sense and oversight have never been elucidated or described. No firings were announced.


What happened to the people who made the botox that put four people in hospital, severe enough poisonings to have killed the victims without intervention? Where did these parties go, if anywhere? Are they still scientists and lab assistants in good standing?


Mum's always been the word. List ran for cover.


If the four poisoned by List Biological's botulinum toxin had died, that would have made one less fatality than the number killed in the anthrax mailings.


Both incidents had to do with select agent misuse. The anthrax mailings led to a spectacular explosion in US bioterror defense spending.


List Biological Laboratories, like many other small firms in the bioterror defense industry, benefited and grew during this go-go period, a time when the US government was spending money like there was no tomorrow on bioterror defense research.


It was apparently a giddy time for List Biological Laboratories, a history to be discussed in a moment.


For two of those poisoned by List's misused research botulinum toxin, there was only the civil court.


In June of 2007, the Ft. Lauderdale Sun-Sentinel reported:


"A South Florida couple that suffered debilitating injuries from deadly anti-wrinkle shots has settled a civil lawsuit against the supplier of the lethal toxin.


"Eric and Bonnie Kaplan, of Palm Beach Gardens, were among four people who almost died of botulism poisoning in 2004 after they were injected with a toxin more than 2,850 times the lethal dose at an Oakland Park clinic ...


"The terms of the settlement, finalized on the eve of a trial that was scheduled to begin Monday in Broward Circuit Court, include a confidentiality clause, said attorneys for both sides. The settlement is between the Kaplans and List Biological Laboratories of California, which supplied the raw botulinum toxin ..."


It was the standard corporate remedy, complete with a non-disclosure clause.You can have the money, folks, under the condition you never speak of this again.


List had also been damaged by the FBI raid and botox case publicity. The extent of the damage would not become visible until the company filed for bankruptcy late last year.


"Campbell, Calif.-based List Biological, a biotechnology company which produces and researches bacterial toxins, files for Chapter 11 with $1 million to $10 million in both total assets and liabilities," read a small item on December 11, published in the Daily Deal.


Throughout the year, List's bankruptcy case has been proceeding through a San Jose court.


Paradoxically, List's bankruptcy filing put an end to another civil suit brought against it, one by one of its infamous clients, Bach McComb. That legal stay -- in pdf form -- is here.


The List bankruptcy case is an argument by the company that it should be allowed to continue business as it reorganizes.


Part of it, for example, is a stay to keep its utilities -- gas, electric, garbage and Internet -- plugged in. That request is here.


List Biological's creditors list, which has been furnished to the court a couple times, includes not only the many businesses it is in debt to but also the names of those convicted in the botox case.


These include Toxin Research International and Bach McComb, as well as Gayle Rothenberg and Saul Gower.


Rothenberg and Gower were a wife and husband team operating a big cosmetic surgery operation in Houston, tried and convicted in yet another complicated chapter in this case.


List lays out an initial argument for its survival in a request for a cash collateral loan so that it may continue operation during the bankruptcy proceedings.


That request is here.


Part of the justification for it is stated in a part entitled "History and Events Leading to the Debtor's Bankruptcy Case."


"In 1988, botulinum toxin became of great interest to List Bio Labs and the Company developed the technology to produce commercial sale botulinum toxin for the research reagent business," it explains.


"As a result of its acknowledged expertise in this area, List Bio Labs was engaged by Allergan, Inc., in the early 1990's to provide assistance ... and to produce clinical grade botulinum toxin. The relationship ensued that led, ultimately to the licensure of the manufacturing facility as well as to the active ingredient in Botox being produced at the facility."


By 2004, greatly increased government spending on bioterror defense research had led to ballooning demand for select agents.


List moved to a new location and expanded its laboratory production facility.


"With this new expanded facility, List Bio Labs is prepared to exploit its biological product expertise and expand the contract manufacturing part of the business," attests the company.


"List Bio Labs is known for providing resources to biological and medical scientists and to the biodefense community. The Company success has been based on the List Bio Labs name recognition and our focus on quality products."


If the reader grimaces while noticing this, it only means that you're still sane.


The List argument implies the company's value lies in things like its production of Botox and its strict adherence to safety and the select control regime.


Without mentioning that the reason List is in bankruptcy is because it turned bad with regards to these matters.



The above snapshot has List arguing there was an upgrade in the protocols of the select agent program in 2003. And the company's infrastructure for agent handling was or is in national compliance. This at the time when List was either selling or about to sell botulinum toxin, a select agent, to Toxin Research International. By 2004, it had sold to Bach McComb and the resulting botulism cases brought the FBI down upon it.



While some readers may be impressed by List's various claims about its employees being approved by the select agent program there's nary a mention the company is in this mess precisely because it sold select agent to bad people.


Who is behind List Biological Laboratories? Their names and faces have never been shown in newspaper stories.


For the purposes of this article, the company president is Karen R. Crawford, one of the five equity holders in List. One of the other holders is List scientist Linda Eaton. Along with List's director of research and development, Nancy Shine, the three appear to be the principals in the company's sales push for its botulinum toxin research preparations and related products over the past few years and during the period when the company's troubles started.


Their accumulated poster sessions on select agent materials, on-line at List, go from 2003 to 2009 -- just before the company filed for bankruptcy.


And here is a patent by all three from 2003 for a substrate used in testing for the activity of botulinum toxin.


The value of this to the company becomes clear when one realizes the counter-bioterror research boom is partly aimed at finding quick detection for materials which the US thinks could be used by terrorists.


In fact, this List special product -- called Snaptide -- was cited as a possible answer for rapid detection of botulinum toxin in foods, milk specifically, in a theoretical bioterror attack scenario published in the prestigious journal, Proceedings of the National Academy of Science.


In this paper, published in November 2004, the author posited 100,000 poisoned individuals through the purposeful contamination of milk with botox -- a near Biblical catastrophe, of sorts. It was an overcooked thought experiment in terror theatre and received great publicity.


Nevertheless, the timing of the paper's reception at PNAS -- in one of those very strange twists of fate -- dovetailed with List's sale of botox to Bach McComb and the four near fatal botulism cases the same month.


In financial statements about List delivered regularly to the court, Crawford, Shine and Eaton are List's highest earners.


For example, during the weekly pay period beginning March 22 and ending April 2, they earned $4348.08, $3957.12, 3840.71 -- respectively. List has a little under thirty employees with salaries ranging from Crawford's high down to somewhat less than a quarter of that for an office assistant.


With address listed in court documents, Crawford lives in a relatively posh abode worth about $2.2 million, according to Zillow. It would seem to feature a nice-looking swimming pool and attached Jacuzzi.


These things, limited as they are, illuminate aspects of List and its brain trust.


And while legitimized botox production is a proven money maker, in the final analysis, there is no compelling argument to be made for List's survival. If it were broken up and its physical and intellectual assets sold off in a firesale with the remains going to creditors, it would be no big loss to science or the biodefense research effort in the US.


There will always be others to take such a company's place, to develop purified or custom biochemical preparations for research purposes. List is only unique with regards to the trouble it has been embroiled in.


On the other hand, there would be a symbolic balancing if the firm was brought to an end.


Perhaps there have been apologies in private.


Perhaps it has been sworn, cross the hearts and hope to die, that this will never happen again. Now the company is good again. Really!


But just because there wasn't something with which to charge people isn't much of a reason for List not going down with the rest of those in this illness-inducing and disgraceful case, anyway.




Post note: The US government -- specifically the Defense Threat Reduction Agency -- paid to find out the level of threat that might be posed by overseas black market botox production being suborned by terrorists. And it was all over the news recently.


It's worth noting the inspiration for analyzing such a problem -- the diversion of botox to bad people -- was minted here in the US, courtesy of the biodefense research industry. First.


In fact, mundane reality may reproduce the American model -- the incidental poisoning of a few people here or there, lining up for black market de-wrinklings, overdosed by the careless and incompetent greedy wanting their piece of the beauty industry action.


An earlier version of this post was published at Dick Destiny.

 
Subscribe to SitRep:
GlobalSecurity.org SitRep RSS Feed GlobalSecurity.org SitRep ATOM Feed