X-Message-Number: 14270
Date: Tue, 08 Aug 2000 19:02:12 -0400
From: Paul Wakfer <>
Subject: Re: CryoNet #14265 - conflicts of interest etc
References: <>

> Message #14265
> From: 
> Date: Mon, 7 Aug 2000 12:52:33 EDT
> Subject: conflicts of interest etc
> Wakfer has mentioned possible conflict of interest involving Fred
> Chamberlain, Alcor, and BioTransport. I would like to see some light on
> certain questions involving the organizations and people indicated below. In
> all cases, the statements of fact are to the best of my knowledge, and I will
> be glad to receive any new or additional relevant information.
> First, for relative newcomers, the following:
> INC is the Institute for Neural Cryobiology. Wakfer appears to be the only
> active director. It appears to be a currently tax exempt, nonprofit
> corporation headquartered in Canada.

1. Under the widely accepted view of what is the most effective method
of operation, the Directors of a corporation should never be "active" in
the direct operations of the corporation. That is the job and
prerogative of the CEO.
2. The Directors of INC are Thomas Donaldson, Peter Gouras and Paul
Wakfer. As Directors, they are all as "active" as they ought to be and
need be. Paul Wakfer is President and CEO. 
3. As a federal and State of California registered charitable
corporation (permanent status achieved in 1998) INC cannot legally be
located or "headquartered" in Canada (I don't think, although I have yet
to find anything specifically stating this). Its official address is
currently 1606 E Washington St #308, Colton, CA 92324. However, there is
no proscription against the CEO of a US corporation being a Canadian,
resident in Canada. When I was barred from entry to the US in June 1999,
if I had been able to find anything forbidding my carrying on remotely
as CEO, then I would have attempted to find someone in the US willing
and able to do so. 

> HCSP is the Hippocampal Slice Cryopreservation Project, the research focus of
> INC.

It is currently the *only* focus of INC.
> HUREI (sometimes just REI) is the Harbor-UCLA Medical Center, Institute for
> Research and Education, apparently run by University of California personnel.

REI (which they call themselves - short for Research and Education
Institute) is a US federal and California state charitable corporation
completely independent of UCLA which is operated by and for the medical
staff of Harbor-UCLA Medical Center (one of the teaching hospitals of
UCLA) and the medical staff of several nearby private medical centers.
> CURI  According to one cryonet posting by Wakfer on 3/4/99, this stands for

> California University Research Institute, apparently the same as REI or HUREI.

I don't remember ever using the acronym CURI, but I may have done so
when I was still attempting to fully disguise the source of the outside
funding as required by the funding party. Now that his funding has
ceased and the place of REI in the project is ending, I am less willing
to continue the charade.

> 21CM is 21st Century Medicine, owned by Saul Kent and Bill Faloon, for
> profit. There are also related for-profit companies.

Although Saul Kent and Bill Faloon are majority shareholders in 21CM
(through some entity called Lexington Holdings - although this may
represent only Saul, I have never asked or been told), there are
numerous minority shareholders, some of them quite large. These
minority shareholders, in order of largest to smallest (as of the last
time that I saw a report (7/27/97) - they do not come yearly as they
should) are: Mike Darwin, Paul Wakfer, Steve Harris, Kathy Leaf, Hugh
Hixon, Greg Fahy, Sandra Russell, Brenda Peters, Roy Yowell, Michael
Riskin, Judy Norman Sharp, Billy H Seidel, Dennis Ross, Frank Rothacker,
Royce A Brown, Rosenbaum Investment Co, Charles Platt, Robert W Krueger,
Deborah Michaluk (now Wowk), Don Laughlin, William Faloon, Herman Earl,
Gil Shaerer, Paiboon Plookvongpanit, Mark Connaughton, CryoCare
Foundation, Thomas Donaldson, Larry Wood, Candy Wood, Keith Lofstrom,

Note that many of the above became shareholders only because of the
purchase (by a 6 for 1 share offering) of all of the assets of Cryovita
Laboratories by 21CM and the subsequent dissolution of Cryovita in 1997.

> INC has been funded by a few individual donations, especially by Ben Best,
> who felt obliged to kick in a lot of his limited personal funds not long ago
> to keep INC in business.

Not exactly. At the time that Ben put up the first money (in late Nov
1999 for use to begin Jan 1, 2000), INC had sufficient funds to keep the
project going for another six months. However, the research had been
going so badly and so slowly (mainly due to communication problems
between Greg Fahy and Yuri Pichugin mostly caused by the distance
between 21CM and REI and the language/cultural/scientific style
barriers) that I was not convinced that it would be a good use of the
INC donor's money to continue the project (although I had no other
plans for it), and Greg himself was not convinced of this. There was
additional funding concern since the funding party from REI had decided
to withdraw his half of the funding support, so that INC would have to
provide *all* funding without having any possibility to raise more funds
at that time because of the lack of *any* positive progress to report.
And for the same reason (lack of meaningful progress) Greg and his
employer (21CM) were increasingly unwilling to spend any time or
resources on the HSCP.
However, Ben Best, to his credit, remained convinced that Yuri could
begin to do good work and produce meaningful results, was willing to put
his money where his mouth was (as so few others ever are), and sought to
arrange a meeting between Yuri and Greg, with Eugene Leitl acting as
interpreter. In early January 2000) this meeting finally took place and
the project (and Yuri) finally got on the right track and began suddenly
to do credible and positive work. The sound science that began then has
continued up to the present and there is now little chance of its
reverting to its former chaotic inept state.
Since then INC has committed all of its remaining funds to the project,
and both Greg and 21CM have been pleasantly surprised by the positive
results. This is shown by the fact that Yuri is now scheduled to work on
a probationary basis directly for and at 21CM as soon as visa
arrangements can be made, something which was never considered possible
by 21CM when Yuri was first brought over from the Ukraine.
It is because of this now very positive atmosphere that I felt, in good
conscience, to be fully able to attempt more fund raising for the
project and was personally willing to put in the effort.
While Ben is now the largest donor to the HSCP (except for what came
from REI, of course), there are many other people who have put in
substantial funds, not to mention the many hours and administrative
funding which I have contributed.   
> 21CM has not spent any cash on INC, although it has
> allowed Greg Fahy to spend some of his time, as an employee of 21CM,
> on INC research oversight.


> According to Wakfer posts on cryonet, INC has contracts with HUREI and with
> 21CM. 21CM gets exclusive marketing rights to any results of HSCP research.

Again correct, although more details are needed for full understanding
One is that 21CM would pay 10% of gross revenues on income from any HSCP
research to INC and INC would split that 50/50 with REI (this last will
not hold for results obtained once REI is no longer associated with the
project - ie once Yuri can legally be at 21CM full-time).

> Besides the obvious questions raised about conflicts of interest

I agree with the conflict of interest potentials. However, cryonics is
so damned small right now and the number of active people so few, that
we have little choice but to allow some such conflicts. The most
important thing is to ensure that they are not blatant, large and real,
such as, for example, two companies contracting with each other who have
the same person as CEO.

> and tax exemption,

There is no such question that I am aware of. 
Please state specifically to what you are referring.

> the more important questions involve the motivations and implied
> likelihoods.

No, only the latter. Motivations don't matter if positive results ensue.
> INC seems to be hanging by a thread,

This a rather strange statement. Charitable corporations have virtually
no expenses (they are so small that I am willing to fund them out of my
pocket so long as I can see a beneficial reason for doing so). So it is
nonsense to say that INC itself is "hanging by a thread". Perhaps you
meant that the HSCP is "hanging by a thread"? However, isn't that the
way of most charitable projects? They all "hang", or depend entirely on
the generosity and self-interest motivations of their donors. INC is not
different. For that matter CI is the same. It depends on its patient's
generosity in leaving large bequests to it.

> gets no money from 21CM, and had to be
> rescued recently by Ben Best's personal added donation.

As explained above this is incorrect, at the time Ben made his donation
of $10,000 INC had $19,200 in its bank account (or very soon after - we
were waiting for a $12K+ refund check on a piece of equipment).

> At the same time,
> Wakfer and Fahy and others seem to believe that INC's HSCP is our best and
> brightest hope for early major advances in brain cryopreservation.

As explained above, there has been a major change in that belief from
quite negative at the start of this year to very positive now. And
further, it is not the HSCP alone which is "our best and brightest hope
for early major advances in brain cryopreservation" but HSCP and 21CM
working together.

> Kent and Faloon
> and their companies have a lot of money, by our standards. They are
> genuine cryonicists, with a keen sense of their personal stake in research
> results. Yet they play hardball with INC, and seem willing to let it die if
> others don't fund it. How are we to interpret all this?

That is a good question which you might ask Greg since he backs the need
for the HSCP's continuation 100%.
However, I interpret it as Saul's desire to get as much outside funding
as possible to augment his own so long as someone else does the fund
raising work. It could also be because of different business plans
concerning what is the best long term path to perfected suspended
animation. This is why Saul's plans in this have changed so many
times over the years. This is also the reason why it is good to have
independent entities following different paths as much as possible.

> One possibility is just hardball and brinkmanship. INC money is not large
> relative to the total 21CM budget, but it isn't insignificant either, and
> obviously Kent, Faloon et al would prefer that other people kick in.

Good. Just as I stated above.

> Another possibility is that Kent, Faloon et al have different priorities.
> Most of the 21CM work is not in cryonics, but related to clinical medicine,
> with possible large financial returns. Maybe they think the bigger picture
> requires making money first, with brain cryopreservation a lower priority.

Again you show good insight. I think this is definitely what Saul's
plans are.

> Incidentally, while Wakfer has previously published estimates of INC funding
> details, we have not, as far as I know, seen detail on money actually spent,
> including wages or salaries actually paid.

This is very simple to say:
zero wages and salaries (except as below),
zero administrative costs,
prior to Jan 1, 2000: $5,000 to Greg Fahy for initial project plan, all
other spending for equipment purchases,
after Jan 1, 2000: all money ($30,000) has been given to REI for Yuri's
salary and project consumables.
When Yuri leaves REI, he will bring the INC owned equipment with him to
use at 21CM.

> Now, some people will regard all this as tiresome and even irrelevant.

I hope not. It is important for understanding. Thank you for outlining
it. With my comments and minor corrections it forms a very useful

> If
> INC's HCSP is so promising, just give them what they need and it doesn't
> matter who profits financially.

Personally, I don't ever thing that is the right approach. I am not
interested in putting in my time to line someone else's pockets or
increase someone else's control. That has already happened to me enough
times in my life (including within cryonics) and I am determined not to
let it happen again. Before Yuri moves to 21CM with the equipment owned
by INC, and certainly before INC puts in further funding, there will
need to be a new contract concluded between INC and 21CM. INC will *not*
be simply donating to 21CM. Either it will purchase shares of 21CM or it
will get 21CM to do contract research for it. Either way, any profits
which ensue from the research results will return to INC for its use to
fund additional research.

> Nothing wrong with that, and mainly for that
> reason we agreed to publish Wakfer's latest donations appeal in the next

Now that I have explained that it is not as much a "give away" as you
thought, I hope you will feel even better about your decision for which
I sincerely thank you.

> But others will want to make a more careful estimate of bang-for-the-buck. CI
> has a research program and so does Alcor, and I believe ACS as well to some
> extent. CI in particular is not swinging for the fences, just working for
> incremental improvements, and we will soon begin to report on a new series of
> experiments. Some of our members may well conclude that the marginal effect
> of their potential donations will be greater for the CI work. Incremental
> improvements are virtually guaranteed; home runs are not.

>From objective information presented, such choice are exactly as it
should be.

> The problem for the average reader, as usual, is that you have basically two
> choices. One is to study all the available data and make calculations of
> probability. The other is to follow your hunches or your favorite guru

I would hope that CryoNet, Immortalist and Cryonics readers are all
rational enough, that they do not even have "gurus", but instead use
their own minds independently to evaluate the information provided and
ask more questions if necessary.

> and
> let it go at that. Or you can have a hybrid approach. In any case, nothing is
> guaranteed, but you have to place your bets and take your chances.

The last is, of course, always the case, except that I do not to see it
similar to "betting" in any manner.

Paul Wakfer

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