Stem Cell Fraud: A 60 Minutes investigation

The following is a script of "Stem Cell Fraud" which aired on Jan. 8, 2012, and was rebroadcast on Aug. 26, 2012. Scott Pelley is the correspondent. Oriana Zill and Michael Rey, producers.

(CBS News) There's no greater desperation than to be told that you, or your child, has a disease for which there is no hope. Many people with incurable illness look forward to the promise of stem cells. Stem cells have the potential to turn into any kind of cell and, in theory, they could repair damaged cells, though, scientists tell us that we are years away from realizing that dream.

There is no stem cell miracle today, so con men, have moved in to offer the hope that science cannot. Just look online and you will find hundreds of credible looking websites offering stem cell cures in overseas clinics.

Two years ago we began investigating stem cell charlatans. We worked with patients suffering from incurable diseases, and we discovered con men, posing as doctors, conducting dangerous medical experiments.

[Scott Pelley: You know, Mr. Stowe, the trouble is that you're a con man.]

Our report started a federal investigation and since that story, we have been digging into the rapidly growing trade in fake stem cell cures. As we reported last January, we've found something even more alarming: illegal stem cell transplants that are dangerous and delivered to your doorstep. They are scams that often bilk the desperate out of their last dollar of savings and their last ounce of hope.

[Brandon Susser: I know you're tired.]

Adam and Brandon Susser are 11-year-old twins. Adam has cerebral palsy, his brain was damaged by a lack of oxygen before he and his brother were born.

Gary Susser: He's confined to a wheelchair. He needs assistance with all his daily living activities from cleanliness to feeding, to clothing.

Gary and Judy Susser have searched for anything that might improve on the judgment handed down by Adam's doctors.

Gary Susser: The sentence of being a quadriplegic, the sentence of being totally blind, the pronouncement by physicians that we should put him away.

Scott Pelley: Those were the things that his regular doctors were telling you?

Gary Susser: Correct. We were being advised literally, "Put him away. He's gonna destroy your life."

So back in 2003, the Sussers took a chance on the theory of stem cells. Adam was three. They brought him to a doctor in Mexico who injected stem cells with no idea whether they would work.

Judy Susser: We both decided that in the severity of his condition that we'd have to try it.

Apparently, there was no harm and no miracle.

Gary Susser: The progress that he made after that was minimal at best and therefore we didn't see any good coming out of it.

Today, people like the Sussers can find hundreds of sophisticated websites offering stem cell treatments for every hopeless disease.

Gary Susser: I see how people are preyed upon by hucksters and charlatans. And people who have a special child don't need any more expense, don't need any more heartache, and don't need any more false promises. They need the truth and they need hope.

To help us learn the truth about the illicit stem cell industry, the Sussers agreed to work with us in an investigation of one stem cell laboratory. We focused on Stem Tech Labs of Ecuador because it offers cures for cerebral palsy and a long list of 70 incurable diseases. The website claims a "modern day medical miracle" and says "we are FDA registered," apparent approval from the Food and Drug Administration.

The founder and director of Stem Tech Labs is an Alabama doctor named Dan Ecklund. We've been tracking Dr. Ecklund for months.

[Gary Susser: Hello, is Dan Ecklund there please?]

In October, we asked the Sussers to contact Dr. Ecklund. Ecklund sent them a letter which offered the blind and paralyzed Adam the possibility of an improved level of consciousness, improved ability to see, to speak, to stand and walk. What can stem cells really do today? We asked a scientist who's doing some of the world's most advanced studies in stem cells, Dr. Joanne Kurtzberg.

Dr. Joanne Kurtzberg: I believe stem cells have a lot of promise. But we are way at the infancy. Because real stem cells are very difficult to control as therapy. I personally think we're 10 years away from seeing real cell therapies that are working and are safe, but I do believe it will come.

Dr. Kurtzberg is a physician and the chief scientific officer of a stem cell research program at Duke University. She advises the federal government and she's co-director of this multimillion dollar laboratory which works with stem cells harvested from umbilical cord blood. Dr. Kurtzberg told us there's no evidence yet that stem cells can treat cerebral palsy.

Pelley: Some of the diseases that we see stem cell cures offered for on the Internet include multiple sclerosis.

Kurtzberg: There are no stem cell cures yet for multiple sclerosis.

Pelley: Lou Gehrig's disease?

Kurtzberg: I wish there were but there are not.

Pelley: You know, I wonder how often it happens that you have to tell a patient, 'I'm sorry. There's nothing we can do.' And then they come back to you two days later and say, 'Well, I see all these cures on the Internet.'

Kurtzberg: I get many of those calls and emails and, and, see many of those patients. But it's very dishonest to mislead people when there's nothin' you can do.

But there's a lot that can be done for Adam Susser according to Dr. Ecklund who spoke to the Sussers from his lab in Ecuador.

[Gary Susser: Say hello to Dr. Dan, Adam.]

Dr. Ecklund's only examination of Adam came by teleconference. Ecklund didn't know we were watching.

[Judy Susser: Do you think it would help him, you know, make him improve?

Dr. Dan Ecklund: I think it's likely to help him, yes. I would say 75 percent chance that if-- that he would have a noticeable improvement.]

Ecklund proposed four treatments costing a total of $20,000. The Sussers asked Ecklund to treat Adam near their Florida home.

[Ecklund: Again, my concern would be the legalities of it.]

He's right to be concerned. It would be a felony to use stem cells in an unapproved therapy or to sell them for export to the U.S. That's why we were surprised to see this on many websites: a shopping cart. We clicked on Ecklund's Stem Tech Labs cart and - with no medical or scientific credentials - we bought 20 million umbilical cord stem cells for $5,000; shipped to America.

We had the cells sent by the highest medical standard. Duke University suggested we use something called a dry shipper, cooled with liquid nitrogen. We sent the dry shipper to Stem Tech. Stem Tech sent the frozen cells to us, and we forwarded them to Joanne Kurtzberg. A computer chip inside our package, verified the cells were properly frozen all the way.

Dr. Kurtzberg analyzed the cells. For comparison, look under the microscope, healthy umbilical cord stem cells look like this. The cells we got from Stem Tech had disintegrated.

Kurtzberg: So these are the cells you purchased. And they are dying, or dead.

Pelley: We see all of these dead and disintegrating cells, and essentially cellular debris. Are there dangers of injecting that into someone?

Kurtzberg: There are huge dangers if you injected that into someone's blood or spinal fluid because all these little fragments and debris would get trapped somewhere in the blood stream and could cause a stroke, or in the brain could cause an inflammatory reaction.

Pelley: This could actually do harm?

Kurtzberg: Yes. This could do a great deal of harm.

Remember, the Sussers asked Dr. Ecklund to treat Adam in the U.S. and last winter, he got out of a van to meet Gary Susser at a Florida hotel where Ecklund planned to do the transplant.

We dug into Dr. Ecklund's background and we found things he hadn't told the Sussers. This is the document in which the state of Alabama revoked his medical license in 2005. The State Medical Commission said Dr. Ecklund admitted that he:

- Prescribed controlled substances to a patient with whom he was having sex

- Prescribed controlled substances to a patient who he knew was a drug addict

- And had sexual experiences with young female children

We also tracked down his laboratory in Ecuador, not exactly the state of the art facility claimed in his website.

The hotel room Gary Susser and Dan Ecklund headed for was set up with a number of cameras that were tucked out of sight.

Susser excused himself. Ecklund was expecting to meet Judy and Adam, the blind and paralyzed 11-year-old in whom he intended to transplant stem cells, cells from his lab that sold us dangerous biomedical junk. Instead, we came in.

Pelley: Dr. Ecklund, I'm Scott Pelley, with "60 Minutes."

Ecklund: Oh, great.

Pelley: How are you today?

Ecklund: I am--uh- surprised.

Pelley: We've been working with the Sussers on a story, and I want you to know that we're being recorded. And I wanted to ask you about the treatment that you propose for Adam. What would that be?

Ecklund: The treatment that he asked about was for stem cells. Human stem cells.

Pelley: And you think they're applicable for cerebral palsy?

Ecklund: Yes. I have seen them be effective in cases of cerebral palsy.

Peley: How does that work, exactly?

Ecklund: Well, stem cells contain-- excuse me, here. No one knows exactly. Okay? But stem-- stem cells do contain and give off chemicals which cause other cells to repair themselves.

Pelley: In the letter that you sent the Sussers, you described possible effects for Adam. Which could include improved ability to see, improved ability to speak, improved ability to move arms and legs. You believe those things are possible?

Ecklund: I do.

Pelley: What is your training in stem cells?

Ecklund: My training in stem cells was I studied for about six years going over the literature. And then I started producing stem-- stem cells, in my lab.

Pelley: You're self-educated, self-taught?

Ecklund: Uh-huh (affirm).

Pelley: Have you published any research?

Ecklund: No.

Pelley: Frankly, Dr. Ecklund, you have nothing to base your results on. There's no clinical trial, there's no-- there's no blind study. There are no medical papers published.

Ecklund: That doesn't make any difference.

Pelley: You know, you say you-- it doesn't make any difference, that you haven't done these studies. I would imagine--

Ecklund: The studies have been done in other countries.

Pelley: I would imagine it would make a big difference to the Sussers.

Ecklund: The studies have been done in other countries. These are not published in the United States, because they cannot be published in the United States.

Pelley: Where is this seen in the medical literature, anywhere in the world? If you did the things that you describe in this paper, you would win the Nobel Prize.

Ecklund: No, if I did the things that are described in that paper, it would not be published, it would be suppressed. And you wouldn't see-- you wouldn't hear about it.

Ecklund told us breakthroughs with stem cells aren't published in scientific journals because of a conspiracy of drug companies and governments that he had trouble defining. That's when we told him we bought cells from his lab.

Pelley: When your cells are delivered, they're functioning, living stem cells?

Ecklund: Yes.

Pelley: We purchased some stem cells from Stem Tech Labs six months, or so, ago. And had them delivered to Duke University, which did tests on the stem cells. And they determined that the stem cells were dead.

Ecklund: Well, they must not have handled them appropriately, then.

Pelley: You're thinking that you handled them appropriately, but the stem cell laboratories at Duke University did not?

Ecklund: That would be my assumption, yeah.

Kurtzberg: I don't think that there's any chance they were damaged in shipment.

We asked Dr. Kurtzberg to listen to Ecklund's theories.

Ecklund: Yes. I have seen them be effective in cases of cerebral palsy.

Kurtzberg: This is pretty scary actually that he would be saying these things, that he would be leading them on this way because what he's talking about is very dangerous.

Pelley: Is this a con, Dr. Ecklund?

Ecklund: No, it's not a con. I have taken the stem cells myself. Would I take the stem cells if I thought that they were a con? No.

Pelley: Putting them in an 11-year-old boy is entirely a different matter.

Ecklund: That's why I took care to explain the remotest possible difficulties, which have never been reported.

Pelley: Without any medical studies that have been published in major journals, that have suggested that stem cells have any efficacy in cerebral palsy--

Ecklund: You keep going back to this point. That they're not published in major eth-- in major medical journals. I'm telling you--

Pelley: It is the standard of the world. I do keep going to that point.

Ecklund: I'm telling you that they are not going to be published in this country. Because when someone does try to do it, then they have "60 Minutes" come and visit them. And I think that's enough for me, thank you.

We don't know where Dan Ecklund went, but we do know the whereabouts of the two con men who were the subjects of our first stem cell story two years ago.

In that investigation, we worked with patients, Steven Watters and Michael Martin, who suffered with ALS, also known as Lou Gehrig's disease. They were promised miracles from Lawrence Stowe and Frank Morales who offered a $125,000 stem cell therapy.

[Steve Watters: Will it keep me out of a wheelchair?

Lawrence Stowe: Oh, yeah, absolutely.]

Our story launched a federal investigation. And last January, Morales and Stowe were indicted. The indictment alleges they made $1.5 million with stem cell fraud. If convicted they could face 20 years in prison.

The patients who helped us, Steven Watters and Michael Martin, lost their lives to ALS last year.