The story broke on July 28 when a brief news item appeared on the official website of the Hungarian police. The police discovered that since early in 2007 a research laboratory and a private hospital had been engaged in embryonic stem cell therapy (not research) that is illegal in Hungary. In fact, it was only in January 2009 that the first country–bizarrely enough, the United States that as a result of political proscriptions had lagged the rest of the world in stem cell research–cleared the way for embryonic stem cell therapy. Geron Corporation got permission from the FDA to conduct clinical trials on people with spinal injuries. (See http://www.geron.com/media/pressview.aspx?id=1148)
The Hungarian police arrested four people: "B. Julliy" who turned out to be Yuliy Baltaytis, a Ukranian-born U.S. citizen; a Ukrainian woman, Natalia K., who apparently supplied the embryonic stem cells from Kharkov and Kiev; and two unnamed Hungarians, one of whom was charged with assisting the doctors "in the transportation of the cooling equipment, the handling of shipments from Ukraine, and the transportation of the patients to and fro." The police claimed that the "therapists" demanded 5 million Hungarian forints ($25,000) for a single treatment.
A few hours later Stop.hu already knew that the people were arrested in a Budapest hospital (it turned out to be the Gyula Nyírő Kórház) and that there was a police search somewhere in "southern Transdanubia." A few minutes later Somogy Megyei Újság, normally very well informed on local issues, reported that the search took place in Kaposvár in a fancy private hospital specializing in plastic surgery. The hospital, Seffer-Renner Magánklinika Kft., is owned at least in part by two brothers: István and Tibor Seffer. István, it seems, is currently in police custody, but his brother Tibor and István's lawyer claim that their hospital has nothing to do with anything illegal. In November 2007 the hospital rented facilities to a laboratory–IRM Magyarország Zrt.–allegedly doing stem cell research. But since the laboratory never got the requisite permission to operate, the space has been empty ever since. They're right: the firm didn't get a permit from the Egészségügyi Tudományos Tanács (ETT; Medical Scientific Council) because the council could not corroborate the alleged qualifications of the applicants. For example, they couldn't find any scientific papers written by the doctors proposing the project. They found only two books written by Yuliy Baltaytis, both published at his own expense. Baltaytis proudly noted on his website that he was a member of an academy located in New York, but "it turned out that membership could be purchased for a yearly fee of $125,000."
ETT didn't know the half of it. I did a bit of research myself on Baltaytis, and one of my first hits was Quackwatch, an internet site that claims to be "Your Guide to Quackery, Health Fraud, and Intelligent Decisions." The article, dealing in part with Baltaytis, was written by Stephen Barrett, M.D. The title of the piece is "The Shady Side of Embryonic Stem Cell Therapy." An excerpt: "The Vita Nova Clinic offers stem cell therapy designed and administered by Professor Yuliy V. Baltaytis, MD, PhD, DSc. The Vita Nova site claims that Baltaytis has written six books and over 200 scientific articles and has successfully treated patients with arthritis, Alzheimer's, cancer, diabetes, leukemia, and many other conditions. However, he has no publications indexed in Medline and is not mentioned on any other Web site (which I would expect if he had significant scientific standing)." http://www.xcell-center.com/treatments/overview.aspx?gclid=CO6tmPPJgJwCFdVL5QodFlsY-g From this article I gather that at one point Baltaytis was running a scam under the name of Vita Nova Clinic in the United States. However, soon enough he turned up in Barbados in a joint venture with Imre Pákh, an American-Hungarian, who nowadays lives off and on in Hungary. If my memory serves me, the elder Pákh who made a fortune in the United States was a great friend and supporter of József Torgyán and other right-wing Hungarian organizations. In fact, Torgyán was Pákh's guest during one of his travels to the United States. Pákh apparently decided to finance Baltaytis's venture in Barbados because he successfully treated his father.
The Barbados venture came to a sorry end in December 2006 when BBC did a bit of investigative reporting on this shady business. Even then the stem cells came from Ukraine where there are no regulations concerning embryonic stem cells. As a result of BBC's revelations the authorities in Barbados closed the operation down. Apparently Baltaytis subsequently gave an interview to the local media in which he announced that he was going to continue his work somewhere in Europe. That he settled on Hungary is not at all surprising given Pákh's stake in the business.
They were in a hurry. By June 2007 Baltaytis and Pákh established a new venture in Hungary: IRM Magyarország Nemzetközi Biotechnológiai és Őssejt Központ Zrt. The owner (50%) was IRM Biopharma Holdings Limited, incorporated in the Virgin Islands. The new firm's headquarters were in Budapest, in District XIII, and it had an affiliated site in Kaposvár, allegedly in the buildings of the Seffer hospital. The CEO of the company was Sándor Szabó and on the board we find Imre Pákh, István Seffer, the plastic surgeon from Kaposvár, and Ádám Fásy, a "media star" who apparently became rich as a result of starting beauty pageants in Hungary. Otherwise, Fásy has a rather primitive program on ATV called "Fásy mulató.""Fásy Revelry." I found a picture of Baltaytis (left) and Fásy (middle) taken on the occasion of opening the facilities in Kaposvár–whether in the hospital or elsewhere in the city we don't know.
How many people fell for this scam? The police definitely know about eight, but others guess that the number might be closer to 100. Blikk, a tabloid usually quite well informed, thinks that in the last two years the people involved might have taken in close to one billion forints. It seems that the "gang of four" had working arrangements with three hospitals. Whether the directors of these hospitals knew what was going on in their rented facilities is hard to tell. All of them now say they didn't have a clue.
In keeping with the high cost/low profile image of the venture, there have been media reports that the "treatment" was also administered in private apartments and hotel rooms, either by injection or infusion.
The police seized as evidence vials ready to be used at the raided Budapest hospitals. In the media there were all sorts of contradictory reports about the vials' contents. First, we were told that they contained only a saline solution, and some of the doctors interviewed were relieved. Later reports talked about some protein content, and even later reports said that there were indeed stem cells in the vials as well.
This little Hungarian business venture might be costly to its so-called entrepreneurs. According to the Hungarian criminal code trafficking in human organs carries a maximum of eight years.