Who doesn’t remember the Volkswagen scandal of a few years ago? To refresh the story of upper management pressuring the diesel engine QA department to falsify their test emissions results, I will share that their choices cost them nearly $35 billion in fines and penalties.
When we use a product, any type of product, we assume it has been tested to ensure that it is what it says it is and does what it says it does. While I am not about to compare the effectiveness and efficacy of sunscreens and skin lotions (tested by AMA testing laboratories) to a $40,000 SUV, fraud is still fraud. Then again, for a person who is highly sensitive to the sun and prone to skin cancers, it is also not to be minimized.
Gabriel Letizia
AMA Laboratories in New City, New York is in no way associated with the American Medical Association. In fact, its initials signal that perhaps something was already afoot with this organization. The owner and executive director of AMA Laboratories, Inc. (“AMA”) is Gabriel Letizia. He has just pled guilty to fraud.
According to Prosecuting Attorney Audrey Strauss:
“As he has now admitted, Gabriel Letizia schemed for decades to defraud customers of his laboratory, and caused sunscreens and other consumer products to be sold and marketed to consumers on the basis of false laboratory testing reports…”
The rather slick AMA website proudly states that:
“AMA Laboratories has been conducting efficacy and claim support testing for skincare, haircare, cosmetics and drug products for over 30 years.”
In fact, the company proudly showcases the fact that they have unique testing methods second-to-none in the industry. Not to be flippant but in this case, second-to-none also means “none.”
Apparently, Letizia had plenty of help in his fraudulent scheme. Not only did he plead guilty for carrying out product testing that was not fully performed, in court (previous to Letizia’s trial), four subordinate employees pled guilty as well.
Who Takes Ownership?
Cosmetics testing is serious business. Tests are ultimately carried out on panelists as the final step before release to the public. The FDA demands that a certain number of panelists must be employed to statistically prove that a product won’t cause a serious allergic reaction. Finding panelists to meet a certain set of pre-arranged criteria is time-consuming and can be expensive. Letizia found a way to get around this. Instead of 50 panelists, for example, AMA Laboratories “used 5.” Obviously, all it takes is someone to create fake panelists.
But who volunteered to fake these results – and why?
The FBI and Department of Justice found that Letizia’s employees, acting under his direction, sent their customers fake reports. In fact, customers paying very good money for product testing (more than $46 million) were duped from AMA’s beginnings in 1987 through to Spring 2017.
In doing less than the required amount of work, AMA was able to pocket the profits that came from ignoring the testing guidelines. Letizia, now 71, could be imprisoned for many years.
Before we talk about why “good people commit fraud” it needs to be acknowledged that every company entrusting AMA Laboratories to properly test, has now opened themselves up to customer lawsuits. It obviously creates a major legal mess. Every severe skin irritation, eye problem, presumed allergic reaction and even wrongful death from anaphylactic reactions of unknown origin potentially put companies in the crosshairs.
The fact that AMA faked the tests was one thing, but the implications of this nationwide are another. While we as consumers don’t think about this, ever manufacturer who entrusts an independent laboratory must now think closely on these consequences.
Why did “good people commit fraud?” Perhaps they feared losing their jobs and benefits as did the technicians at Volkswagen, but deeper than that, they followed their own unethical paths. They too realized there was little in the way of oversite to faking their data (“Everyone in the industry does it”). Then there was the need (“I have a family to support and AMA Laboratories offers a good salary”) and ultimately, a rationalization (“It’s only cosmetics testing, or skin creams or harmless drugs).”
I believe from an ethical point of view that everyone who agreed to faking results felt that it would be Letizia, and he alone, who would suffer the consequences. They have since realized they have consequences as well. Letizia was not worth it.
Ethical training must be given to employees of independent testing laboratories. Who, officially will step up and make sure that will happen?
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