by Anniel 6/21/17
Five Heart-Stopping Years as a CEO on the Feds Hit List. Authors: Howard Root, with Stephen Saltarelli. Available on Kindle. • I had decided to review this book some time ago because I thought it was so important, but how to do it justice eluded me. I think I have read it now about five times, even though it is very lengthy, and I have had to consider why it is so difficult for me to review it when it is so fascinating. I concluded my problem was I wanted to write everything it tells so you won’t miss a thing. I have finally decided to cut it down and give it my very highest recommendation.
This book is a true story as experienced by the author, Howard Root, and written from his perspective. He uses his recollections, his company’s records, and official grand jury and court transcripts to report on this case.
I listened to Mr. Root speak recently about his ordeal with the Feds when they decided to make a phony criminal case against his medical equipment company, and against him personally. His 45 minute speech can be found on YouTube, although his book is much more illuminating about the actual events and bureaucrats he and his company faced.
This book left me with heartburn about our government and its agencies, and the justice system and Congress in particular. Even when events were humorous and the good-guys demonstrated beyond doubt how dumb the bad-guys were, my heartburn was only slightly relieved.
Mr. Root was a practicing attorney in a Minnesota law firm when he decided to form his own public medical equipment company, which is called Vascular Solutions, Inc. (VSI). After 14 years he was CEO of VSI, which was mostly owned by mutual funds, had a Board of Directors and was a well-run and profitable company.
The first time he had an inkling anything was going on was just before the 4th of July, 2011 when he was called by his General Counsel, Michael Blum, who told him he had taken a call from a woman lawyer in Texas named Kimberly Johnson saying, “the company would be served with a subpoena the next day.” Then he mentioned the word “whistleblower,” and Root knew exactly who was behind the West Texas lawyer and her subpoena.
VSI had a former pharma sales representative named Eddie Pendragon. Eddie had no background in medical devices. In 2009 Eddie told Root he was leaving VCI to join a company that sold urology products. Eddie’s quitting was a loss, but not a major one. He gave his two week notice and moved on. A month later VCI discovered that Pendragon had taken a job at a firm called Spectranetics, one of VCI’s competitors in selling tools for treating heart disease. Eddie would later team up with another former VCI employee, DeSalle Bui, who quit the company when he didn’t get promoted to a higher position. Bui would later lie and accuse the company of Medicare and and Medicaid fraud.
Back to Eddie, who was armed with VCI’s confidential customer base and price lists, Eddie could convert all of them to Specranetics, while also selling them VCI products. Then Root discovered that Eddie had begun working for Spectranetics two weeks before he left VCI. Double dipping must have seemed attractive.
Root was forced to get a restraining order against Spectranetics, to recover salary paid to Pendragon and for damages inflicted on VCI in their El Paso business.
A few days after receiving the notice of subpoena, Michael Blum left this message for Root:
I wanted to see if the prosecutor would tell whether the target of the investigation is a Vascular Solutions employee or a health care provider. She mentioned that Vascular Solutions is the direct target of the investigation and that the investigation is criminal in nature.
On July 5, 2011 Root held a briefing for his lawyers on the varicose vein product he had discovered was at the center of the criminal complaint. Root prepared carefully for this to show them how ridiculous the charges were:
We all know varicose veins look ugly, but they aren’t just a cosmetic problem. Left untreated, the crushing pressure of all that pooling blood in the vein can cause skin ulcers and, eventually, amputation of the leg. . . Years ago, doctors treated varicose veins using a barbaric procedure called vein stripping. In it, the leg is fileted open and the entire vein is literally ripped out. Once the diseased vein is gone, the blood finds its way back to the heart through the remaining healthy veins.
. . . (Around 2001) two doctors developed a new way to permanently shut down varicose veins using laser energy to heat them from the inside. Through just a needle prick, a doctor inserts a thin glass rod called a laser fiber into the patient’s vein, turns it on, and pulls it through the diseased portion of the vein. This procedure is called endovenous laser ablation, and unlike vein stripping, the patient walks in and walks out an hour later with their varicose veins fixed and only a Band-aid over the needle puncture.
Root says that VCI sells kits to doctors with everything necessary to complete the endovenous laser ablations for each patient. The kits come in different lengths, as Root explains:
Because there are so many different lengths of varicose veins, and because doctors like to buy customized products, we sell over 80 different versions of our procedure kit.The subpoena looks like it’s all about one version we started selling in 2007, called the Short Kit. The only difference in our Short Kit and our other kits is the length of that introducer sheath – the tunnel. The Short Kits sheath is 10 centimeters long, which compared to the Flex, our longest, which is 100 centimeters. We even sell a version that’s shorter than the Short Kit, called the 5
Centimeter Kit. So that’s like the “Shorter Kit.”
The author then lets his readers know that: . . .(anatomically) there are, “two tracks of veins in the legs: deep veins, which are closer to the bones, and superficial veins which are closer to the skin. The short veins that connect these two tracks are called perforator veins. Although perforator veins are rarely treated, as far as I can tell, they’re the entire focus of the subpoena.”
By this time it was obvious that someone at the FDA has made a big mistake in their subpoena, and of course Root and his lawyers tried to tell them so. Their first paper dump to the FDA was over 10,000 pages and no one seemed to read it. The FDA bureaucrats sent only new demands for the same information and upped the ante for monetary settlement to the case, and, of course Root himself would have to sign a waiver admitting guilt in selling the short kit, which meant he would be a criminal and barred from the company. He said he would never sign such a waiver.
Roots lawyers kept telling him that it would be cheaper to just go ahead and settle, but he knew that signing such a waiver would drive VCI’s stock prices down and probably destroy both him and the company.
Root emphasizes again and again that NO PATIENT HAS EVER BEEN HARMED by the Vari-lase products his company sells. All the doctors have only praise for the system.
Root spends a lot of time explaining the good and the very bad defense lawyers he had to consult. He had a terrible time finding good attorneys, and he was someone who had himself been a lawyer. Scary business being pursued by the government.
One statistic that I found shocking concerned the 162,000 Grand Juries convened by States and Federal Courts in 2010. Only 11 times were indictments refused. Those prosecutor’s ham sandwich’s are easy to make.
The two so-called “whistle blowers” would receive substantial rewards, in the millions of dollars, from the government if the case was won. There were the first three FDA civil fraud investigators, Charles Biro, Tim Finley, and, of course, Kimberly Johnson, who would lead the FDA’s case against VCI and Root. But the worst from Eric Holder’s Justice Department would be Walter Paulisson, Jr., known to all as “Bud”, newly demoted from Major Crimes, Western District of Texas, to work “on the line” and start bringing in the big bucks. His first case to cut his teeth on? A little company out of Minnesota called VCI, and its founder.
VCI and Root were under the gun for three years before the long threatened indictment was finally handed down in Texas on 13 November, 2014. It made above the fold, front page news in Minnesota. Root had prepared the Board of Directors and stockholders for such a move on the part of the FDA and had made plans to keep VCI’s stock prices stable.
VCI lawyers put in for a change of venue to Minnesota, but Judge Fred Biery, Jr. presided over the preliminaries and refused. He claimed the criminal activity had occurred in Texas, besides they were all rich and the travel would be no hardship. Root had to go to San Antonio to be treated as a criminal defendant. His lawyer objected to Root’s imprisonment and was able to keep him free, for that time. Judge Biery set the trial date for September 2015, later changed by Government request to February 1, 2016.
One VCI employee, Sales Representative Glen Holden, who had refused to cooperate with the Feds during the Grand Jury Hearings, was also charged with criminal conduct, but his trial would be held separately at a later date.
Root kept saying to any lawyer who would listen that the whole thing made no sense. VCI’s counsel hired a high priced firm Root had found to represent the company in the suit, while Root hired an elderly soft spoken, Minnesotan as his personal attorney.
The firm representing the company recommended hiring what are referred to as Jury Consultants, or Legal Focus Groups. Part of their job is to shape trial messaging. Root approached a highly recommended company in Texas. The President of the company, Robert Hirschhorn, had learned his trade from his late wife and she had passed love of her job on to him. The firm was very expensive and took only one or two cases a year. Deciding to hire that firm, I think, is the most innovative and brilliant move VCI made, and is a fascinating account of good, even if very expensive, trial preparation.
Root, moved to San Antonio to surrender as a charged criminal, but did not have to be incarcerated. His attorney, and all VCI’s lawyers and their support staff eventually made the move to San Antonio, where they began a crash course in BOTH Jury selection, and to practice court action by the lawyers.
Native San Antonians were hired to practice as revolving jurors for $300 per day. For a period of three weeks they were divided up so there were three juries sitting in a large conference room available for the attorneys to practice in front of. The mock jurors and different lawyers would be presented a part of the case, either pro or con, to act out while being watched through a one-way mirror by Hirschhorn, Root, the VCI attorneys, and other legal staff.
Then the jury members would be polled about what they thought and how they would rule if it were a real trial. They had to rate the things that they thought about, if they understood what they heard, even what they thought about the lawyers and descriptions of Root, himself. He only personally appeared before them towards the end.
Hirschhorn would criticize wardrobes, unpolished shoes, posture, speech and other personal habits of the presenters.
Everyone participating in the real trial learned about themselves. But with the training they all received they were able to perform their tasks better as the work went on. Root asked one of the attorneys he liked how many civil trials he had been part of. Answer: None. What about the other one Root liked: The answer again was, none.
One of the legal teams tasks was to learn to “read” the jurors so they would know whom to recuse or keep when things were for real.
Trial strategy planning sessions would also be held so the group could decide on who would give Opening and Closing Statements and take testimony at the actual trial.
Before trial started Fast Eddie Pendragon showed up and said he would testify for Root and VCI because he had been coerced into testifying against them. Of course, just some money slipped into an envelope for him would make him tell the truth at the trial. No nibbles on that.
As time for trial drew near the defense caught what they thought was a break when Judge Biery removed himself from the case. Judge Royce C. Lambeth of the D.C. District Court chose to preside. He had achieved senior status and could choose his own cases. He bragged that he was no pushover for anyone and that he was no rubber stamp for the government.
Believe no one seems to be a rule whenever government officials are concerned.
During the trial the judge never once ruled in favor of the defendants, allowed lies and slander to stand, slept a lot, would not allow clarifications of testimony to be questioned because the government had already answered. He turned out to be a really malignant force.
He said that it was permissible to allow grand jury testimony to stand that had been illegally revealed and used by the government to coerce witnesses. He also ruled favorably for maltreatment of witnesses who realized they should never have answered questions based on the leaked grand jury documents.
Root, and his co-author, Steven Salterelli, one of the lawyers in the case, walk the reader through jury selection to end of the trial. It feels as though you are in the courtroom with them helping them plan their approach and strategy (and dripping sweat, blood and tears with them).
Root, with his wife’s encouragement, began writing a book about his experiences when he couldn’t sleep at night.
After six days of trial, the Jury Consultant suggested they put another lawyer on their team so the jury would not get bored by the same faces. A Korean-American lawyer with spiky hair named, Rob (don’t call me “Ben”) Hur, who had been helping write documents and so was unknown to the jury, was chosen. He was extremely intelligent and his presentation was phenomenal. He was especially good at cross examination and became the defenses’ secret weapon when they wanted to expose the depth of the FDA’s lies in a very clear way. He had never participated in a private trial either.
Bud, Finley and all their crew surprised the defense with their laziness and lack of preparation.
A high ranking woman employee of VSI, who the government tried to present as their main witness against Root, changed her testimony when she realized government agents had lied to her and never allowed her to have her personal attorney with her during questioning. Bud and Finley had told her when she testified at the Grand Jury proceedings that they would make sure VCI would have to fire her and she would never work in the health care field again unless she signed the affidavit they had prepared for her and testified to its truthfulness in court.
As you read this book It is difficult to believe how corrupt and vindictive the government agents are.
One man, George Scavdis, the FDA Investigating Agent, is the worst of the evil. He sits at the plaintiffs table day after day without saying a word. He dresses kind of sloppy and every day wears the same multi colored shoes, looking bored and restless. Then he is called as a witness as the head of the FDA law enforcement division and it is his testimony that finally makes it clear to Root that the company was peripheral to the criminal charges. Scavdis wanted blood and Root was the chosen sacrificial victim.
Scavdis told the jury that they shouldn’t worry about truth, but only about facts and the law, whether they agreed with it or not. He said that had been his guiding light during his long law enforcement and legal career.
Bud and Finley depended on the Judge to continue ruling favorably for the government. There is some speculation that Bud actually wrote rulings for the judge to sign, which he did.
The trial lasted four weeks. Judge Lambeth allowed the government to present whatever they had, even if it was illegally obtained, and sustained every objection they made and ruled against the defense on every motion they made. In short, he colluded in the Government’s dishonesty until the very end of the trial when he realized that if VCI appealed the case his rulings would be overturned. He did allow VCI jury instructions to be used, probably because they were only one page long.
The VCI attorneys and Root did try to figure out why the judge did what he did, but the only thing they ever discovered was that Lambeth had never presided over a government loss. The judge later claimed he would have set the jury straight if it was necessary.
After the four weeks of trial and two days of jury deliberations, VCI was totally exonerated and Root was found not guilty on every charge against him. He says that his small business case is the only one that has ever been won against the government. He admits he won because he had the backing of VCI’s Board and they were willing to expend the necessary funds in the fight. The government was going to try the other VCI employee facing criminal charges, probably to try and save face, but cooler heads somehow prevailed and the charges were dismissed.
Root tried to go back to the company, but found there were people in his home state and elsewhere who believed he had to be guilty of something and only got off because he was rich. He says he felt like a stranger at his own company. He finally left VCI and decided to finish writing the book about his ordeal.
Alternate Juror No. One, Lisa, would later write Root as follows:
Mr. Root – I could hardly sleep last night as the NOT GUILTY should have come back 10 minutes after the jury headed into deliberations. (I’m sure you’ve had many sleepless nights over the last month, not to mention 5+ years. . .
I turned 52 years old yesterday and in all my life I’ve never feared the government. As a law-abiding, tax contributing citizen one should not have to fear our federal government. Unfortunately, I will never feel that way again. What the federal government did to you, your company and your employees is nothing short of criminal.
Root ends his book with an Afterword called “THE CRIMINALIZATION OF AMERICA.” He says:
I wish I could say my story was a lightning strike in the perfect storm – a few unscrupulous prosecutors conned by desperate whistleblowers. But I can’t. Because prosecutions like mine are exploding across the United States of America, an inevitable by-product of ever-expanding regulations and a foul prosecutorial climate. And whether you know it or not, the criminalization of America affects every one of us.
And one of the men this criminalization has proved so financially lucrative for, Eric Holder, says he is thinking of running for President of the United States.
May the Good Lord have mercy on us.