For Immediate Release - June 09, 2005
Ruvane E. "Rip" Grossman
UM#$%$ Medical School Consultant Fined $10,000 For Improper Role in Licensing Agreement with CytRx
The M#$%$achusetts State Ethics Commission fined Ruvane E. "Rip" Grossman, a former consultant to the University of M#$%$achusetts Medical School (UMMS), $10,000 for violating the state's conflict of interest law. Grossman, a Missouri resident, provided intellectual property consulting services to UMMS to help license technologies developed by UMMS. At the same time, he was also consulting for CytRx Corporation, a California intellectual property marketing firm. By bringing UMMS and CytRx together on the licensing matter while he was consulting for both of them, Grossman violated G.L. c. 268A, §§ 4 and 6.
According to a Disposition Agreement, Grossman brought UMMS and CytRx together to discuss marketing UMMS's ribonucleic acid interference (RNAi) technology. RNAi technology is an important life science and therapeutic technology. Grossman participated in the negotiation of a licensing agreement between UMMS and CytRx by attending meetings, making suggestions and discussing the relevant matters as both an agent for CytRx and as a UMMS consultant. At the time Grossman so participated, he had a consulting contract with UMMS for a maximum of $84,000, in addition to a consulting contract with CytRx for $5,000 a month and a "success fee" of at least $150,000.
In April 2003, UMMS signed a licensing agreement with CytRx by which CytRx would market the RNAi technology and UMMS would receive $200,000, 1.8 million shares in CytRx stock, royalty payments and other beneficial commitments from CytRx. In May 2003, after senior UMMS officials learned of Grossman's dual role, UMMS reviewed the licensing agreement. UMMS determined that it would be advantageous to leave the licensing agreement in place but took additional actions including:
terminating Grossman's relationship with UMMS;
requiring that Grossman forfeit the success fee of $53,000 and 100,000 shares of CytRx stock valued at $240,000 as of October 2003, when the termination agreement was made; and
setting restrictive terms under which CytRx could employee Grossman in the future, ensuring that Grossman would not receive his forfeited commission in the future, not have contact with UMMS about the licenses and not participate in the interpretation of the licenses.
Section 4 of the conflict of interest law prohibits a state employee from receiving compensation from or acting on behalf of anyone other than the Commonwealth in connection with any matter in which the Commonwealth is a party or has a direct and substantial interest. Section 6 prohibits a state employee from participating in a particular matter in which he has a financial interest.
"Individuals who provide services to the Commonwealth - even, in many instances, when working as consultants - owe undivided loyalty to the Commonwealth," said Executive Director Peter Sturges. "The prohibition against serving two masters is an age-old maxim addressing ethical conduct as well as one of the key principles of the conflict of interest law."
Sentiment: Strong Sell
You have to come up with something better then this. Grossman didn't work for CYTR. He negotiated a contract as a middle man & solicited funds from CYTR which he wasn't allowed to do under his agreement with UMMS.