Timeline Pinpoints the Role of Cancer Scandal
In a Progression Leading to Perry’s Indictment
A Story in Mugshots: from left, Jerald Cobbs, former CPRIT chief commercialization officer; Texas Governor Rick Perry; and Travis County District Attorney Rosemary Lehmberg.
By Paul Goldberg
The indictment of Texas Governor Rick Perry by a Travis County grand jury brings together two complex subplots:
• The controversy over the Cancer Prevention and Research Institute of Texas, which came into public view May 8, 2012, with the resignation of its scientific leader, Nobel Laureate Alfred Gilman, who claimed that political interference had caused a departure from standard peer review in the handling of a proposal to fund a $20 million “biotechnology incubator” at MD Anderson Cancer Center, triggering a delay in funding of previously reviewed grants.
• The political wrangling that followed the April 12, 2013, drunk driving arrest of Travis County District Attorney Rosemary Lehmberg, whose duties include administering the Public Integrity Unit, which investigates corruption of state officials.
The plot lines crossed on Dec. 7, 2012, when the Travis County DA initiated a criminal investigation of CPRIT, and they stayed together through the Dec. 3, 2013 indictment of CPRIT’s chief commercialization officer, Jerald Cobbs, on charges stemming from his failure to conduct peer review of a proposal before awarding $11 million in Texas taxpayers’ money.
The case was unrelated to the MD Anderson-led incubator. Cobbs’s trial is expected to begin later this year.
The CPRIT issue has become important because attorneys defending Perry on felony charges of abuse of official capacity and coercion of a public servant have made efforts to defuse it.
“The CPRIT issue the Democrats are trying to peddle is a red herring and a phony issue,” Benjamin Ginsberg, the governor’s attorney, said in a recent telephone conference with reporters. The Perry defense team said they have obtained an affidavit in which a former Travis County Public Integrity Unit investigator said that the governor was not the target of the CPRIT investigation.
CPRIT is a taxpayer-funded initiative that dispenses $300 million a year in state funds for cancer causes.
To examine the plausibility of the issues that emerged in the context of the CPRIT investigation playing a role in the case against Perry, The Cancer Letter put together a timeline that reflects development of these two subplots. The timeline combines legal and political analysis with detailed coverage of controversies at CPRIT and MD Anderson in an effort to examine their potential role in Perry’s indictment.
At the time Lehmberg saw the lights of a police cruiser, her office was going into the fifth month of investigation of irregularities at CPRIT.
That probe involved examination of the role played by at least one major Republican donor—Charles Tate—who emerged as a central figure in the MD Anderson incubator controversy.
Tate’s role can be traced through thousands of pages of documents obtained by The Cancer Letter and several Texas newspapers.
Also, the timeline shows that prosecutors at the Travis County Public Integrity Unit pressed forward on the CPRIT case even after Perry vetoed the state contribution to the prosecutors’ budget, causing a reduction in workforce and a scramble for funds.
Most importantly, during the eight months that elapsed between Lehmberg’s drunk driving scandal and the Cobbs indictment, no one outside the investigation could have been expected to have the capability to gauge the direction of the probe.
Yet, even those tracking the investigation from the sidelines would have been able to see that Travis County investigators, as they conducted interviews, were focusing on some of the most important players in Texas politics.
Consider Tate. A list of his contributions to candidates and political action committees can be found through a simple search of the Texas Ethics Commission website. His beneficiaries include the governor, the lieutenant governor, and the state attorney general, to name a few.
As prosecutors announced the Cobbs indictment, they stated that no further prosecution would be expected in the CPRIT case. However, this doesn’t rule out the possibility that CPRIT figures in the Perry indictment. This is because the Cobbs case turns on whether peer review of a grant proposal was ever conducted, while the Perry case is about exercise of undue influence.
In these two different contexts, the same facts can have very different implications.
By establishing the flow of events, timelines can be used to rule out implausible hypotheses. Nobody outside the investigation knows precisely what the grand jury saw. However, based on analysis of the progression of events, the hypothesis that the CPRIT investigation figured in the events that led to Perry’s indictment cannot be eliminated.
Cobbs, Lehmberg and Perry
Travis County, a blue stronghold in a red state, operates the corruption investigations unit, which many state politicians wish to transfer to the office of the attorney general.
Lehmberg’s drunk driving arrest and less than decorous behavior, which was captured on camera and posted on the Internet, was a godsend to anyone wishing to weaken her office.
Though Lehmberg’s anti-corruption office has prosecuted more Democrats than Republicans, one of its biggest successes was the conviction of another national Republican figure, former Rep. Tom DeLay, who was convicted on criminal charges of conspiracy to violate election law. (The judgment was later overturned by a higher court, and the dismissal of the case is under review by the Texas Court of Criminal Appeals.)
Several CPRIT insiders characterized Cobbs, the indicted CPRIT official, as a functionary directed by a “commercialization” panel—the panel headed by Tate.
Internal CPRIT emails obtained by The Cancer Letter show that Tate played a key role in devising the MD Anderson proposal for a biotech incubator and moving it through the system (The Cancer Letter, Sept. 28, 2012).
The MD Anderson controversy didn’t figure in the Cobbs indictment. The former official was charged with securing execution of a document by deception, a first-degree felony.
It’s not publicly known why Cobbs didn’t conduct a formal review of the $11 million funding proposal from a company called Peloton Therapeutics Inc. of Dallas before deciding to award the grant in 2011.
No information has emerged to suggest that Peloton officials have sought special treatment, or that the company’s science would not have withstood scrutiny. In fact, the company’s science has survived due diligence performed by The Column Group, a venture capital firm that led a Series A financing round investing $18 million in the startup.
Also, Texas billionaire Peter O’Donnell—whose foundation picked up a portion of the salaries of CPRIT officials, and paid for dinners of peer reviewers—was among those investing in Peloton. However, sources say that O’Donnell bought Peloton stock well after the company was funded, and then transferred stock ownership to UT Southwestern.
The stakes in the CPRIT controversy were high: nearly all of the $300 million CPRIT was dispensing every year went through a rigorous peer review system engineered by Gilman.
Under Gilman’s stewardship, CPRIT didn’t promise the cures. Rather, the institute promised well-run study sections that funded good science.
Meanwhile, MD Anderson President Ronald DePinho, then a newcomer to Texas, was seeking to use a portion of CPRIT funds for his $3 billion “Moon Shots Program” to eventually eradicate eight cancers (The Cancer Letter, Sept. 7, 2012, Sept. 21, 2012).
After quitting CPRIT, Gilman and his former chief scientific advisor Phillip Sharp, a fellow Nobel laureate, offered words of caution to guide CPRIT (The Cancer Letter, Oct. 19, 2012).
“Reliance on peer review to identify the best science must continue to guide CPRIT in the future,” Gilman and Sharp wrote. “Of course, there are other ways to distribute public funds, but they are worse. Their side effects include infamy and they end in irrelevance.”
Top Texas officials didn’t seem to feel the sting of Gilman and Sharp’s words. In a joint letter, three politicos promised to go beyond funding basic science and place an increased emphasis of commercial projects (The Cancer Letter, Oct. 26, 2012).
“It is now time for CPRIT to take further steps to fulfill its statutory mission and expedite innovation that will deliver new cancer treatments to patients within three to five years,” the three officials said in a letter.
The troika included Speaker of the House Joe Strauss, Lieutenant Governor David Dewhurst—and Governor Perry.
This timeline draws on over two years of The Cancer Letter’s coverage of the controversy at the Cancer Prevention and Research Institute of Texas and MD Anderson Cancer Center.
The objective is to enrich the existing timelines that have been put together by The Texas Tribune and Texas Lawyer and examine the role the CPRIT and MD Anderson controversies may have played in the indictment of Texas Governor Rick Perry.
• May 8, 2012: Alfred Gilman, a Nobel laureate, submits a letter of resignation from his position as chief scientific officer of the Cancer Prevention and Research Institute of Texas.
His resignation is triggered by two events:
• Efforts to fund a $20 million biotechnology incubator led by MD Anderson Cancer Center. Gilman contends that the proposal is a scientific project disguised as a commercialization project and that it has to go through scientific review. The proposal’s proponents say that it doesn’t.
• Failure to fund multi-institution grants that had previously gone through successful peer review (The Cancer Letter, May 25, 2012).
This is the first time the public learns about irregularities at CPRIT.
By turning whistleblower, Gilman brings into focus efforts by top Texas officials to shift CPRIT’s emphasis from peer reviewed research to commercial projects.
Documents subsequently obtained by The Cancer Letter show a deep rift between basic science and commercialization efforts, focusing on the role played by Tate, the Texas financier, Republican donor, and chief of the CPRIT commercialization panel.
Tate was involved in formulating the proposal for the MD Anderson-led incubator. The key meetings included MD Anderson President Ronald DePinho and his wife Lynda Chin, a senior scientist at MD Anderson (The Cancer Letter, Sept. 28, 2012).
• March 29, 2012: The CPRIT Oversight Committee approves funding for a $20 million biotech incubator co-directed by MD Anderson and Rice University.
The money was intended to fund the MD Anderson Institute for Applied Cancer Science, which is, in effect, functions a lot like a drug company operating within the cancer center. The idea behind the institute is to be able to move rapidly to start—and discontinue—projects.
Tate was the author of an earlier plan to exempt technology incubators from scientific review.
In emails obtained by The Cancer Letter, Chin said that the decision to combine the Rice and MD Anderson proposals was made on Dec. 1, 2011, at a meeting with Tate.
Emails show that Jerald Cobbs was the official who received the proposal from MD Anderson’s IACS. The proposal was sent to Cobbs as an attachment to an email from an official at MD Anderson.
The proposal appears to depart from two standard procedures for submission or research grants: (1) it was never reviewed by the MD Anderson provost; and (2) it went directly to Cobbs, bypassing the CPRIT portal, which must be used for submission of applications.
Prior to submission—in early March 2012—Cobbs asked Gilman to look over the IACS proposal. Gilman said that the document lacked scientific content: there were no targets mentioned, no molecules, no diseases, and no intellectual property. There was nothing to review.
Gilman said the proposal should be submitted as a large, multi-investigator grant, accompanied by sufficient detail. Cobbs concurred, telling Gilman that the Chin proposal would go nowhere, at least until the problems are resolved.
Documents show that, unbeknownst to Gilman, Tate was working on a plan to combine the proposals and get them to oversight committee.
On March 14, 2012, in an email to Cobbs, CPRIT Executive Director Bill Gimson stated that Tate had warned him about considering the Rice proposal first, to be followed by the MD Anderson proposal: “Jerry: Charles just called me—he is concerned about timing and bifurcated approach of the Rice/IACS Incubator.”
Even though funding for the MD Anderson-led project was approved, no money changed hands.
• Oct. 12, 2012: Gilman leaves CPRIT. Many top-level scientists who participated in the study sections follow, submitting blistering letters of resignation (The Cancer Letter, Oct. 12, 2012, Oct. 26, 2012).
• Nov. 16, 2012: Cobbs unexpectedly resigns as chief commercialization officer of CPRIT, stating that he plans to return to the private sector. The agency officials declined to elaborate on the departure, initially describing it as a “personnel matter” (The Cancer Letter, Nov. 30, 2012).
• Nov. 29, 2012: The Peloton problem is announced in a press release. CPRIT officials state that, in the course of a compliance review, they discovered that the company’s proposal received $11 million without any peer review. The state agency said it has notified Peloton and placed a hold on future funding (The Cancer Letter, Nov. 30, 2012).
• Nov. 30, 2012: Two state legislators who wrote the legislation that created CPRIT write a letter to express “deep concern” about the agency funding a grant to Peloton without formal peer review.
“As the authors of the original CPRIT statute—and subsequent legislation to strengthen the institute’s guidelines to ensure transparency and prevent conflicts of interest—we require an explanation in writing as to how this occurred. That explanation should include a description of what occurred, when and how the problem was discovered, what actions have been taken to rectify the situation, and how CPRIT proposes to prevent such oversight from occurring in the future,” wrote State Sen. Jane Nelson (R-Flower Mound) and Rep. Jim Keffer, (R-Eastland) in a letter to CPRIT (The Cancer Letter, Dec. 14, 2012).
• Dec. 7, 2012: The Travis County district attorney opens a criminal investigation of the “award of grants” by CPRIT. No grant is specified. The matter is assigned to the Public Integrity Unit. (The Cancer Letter, Dec. 14, 2012).
• Dec. 8, 2012: CPRIT Oversight Committee Chairman Jimmy Mansour asks for an investigation by the Texas attorney general and an audit by Deloitte Touche. His email to CPRIT Executive Director Bill Gimson reads: “Please contact the Attorney General’s office and request that he direct his attorneys to seek affidavits from all individuals related to or associated with Peloton past and present. Please encourage them to return to us as soon as possible. Please contact the Governor’s Office requesting an emergency waiver approval for an audit of CPRIT by Deloitte Touche. Please contact DIR and request forensic assistance in recovering all lost email between Gerry Cobb, Al Gilman and Bob Ulrich relating to [Peloton]. Also, please send this note to the Board.”
A subsequent email reads: “We need to know if they have any financial interest in Peloton or benefited in some related way from it receiving approval.”
• Dec. 10, 2012: CPRIT Executive Director Gimson submits a letter of resignation. Margaret Kripke’s acceptance of the job of CPRIT chief scientific officer is announced (The Cancer Letter, Dec. 14, 2012).
Texas Attorney General Greg Abbott informs CPRIT that it has opened an inquiry into “the flawed grant that [CPRIT] awarded to Peloton Therapeutics.”
The letter states that “the review will include—but is not limited to—any financial interest CPRIT staff or any other individual may have had in the Peloton grant award. Abbott was a member of the CPRIT oversight committee. (The Cancer Letter, Dec. 14, 2012). The investigation hasn’t resulted in any actions.
• April 12, 2013: Travis County District Attorney Rosemary Lehmberg is charged with driving while intoxicated. She was traveling in the bike lane for a mile. An open bottle of vodka is found in the car’s passenger area.
• April 19, 2013: Lehmberg pleads guilty to a misdemeanor and begins a 45-day sentence in jail.
• April 29, 2013: Travis County Attorney David Escamilla files a lawsuit seeking to remove Lehmberg from office because of the drunk driving incident.
• May 24, 2013: Lehmberg counters by claiming that the Texas statute that enables removal of government officials for drunkenness is unconstitutional. Also, habitual drunkenness—as opposed to one incident—should be required.
• June 17, 2013: A line-item veto by Perry strikes $7.57 million in funds for the Public Integrity Unit of the Travis County District Attorney Office. Perry says he denied state funding because Lehmberg had “lost public confidence.”
• July 2, 2013: The Travis County Commissioners Court vote to send “reduction in force” notices to over 30 employees of the Public Integrity Unit, effective Sept. 30, 2013. The jobs are being eliminated because Perry had vetoed the funding.
• July 8, 2013: San Antonio lawyer Michael McCrum, former DA of Brazos County, is appointed to investigate a criminal complaint against Lehmberg. The allegation: Lehmberg committed a felony when she threatened jailers following her DWI arrest.
McCrum, whose political leanings are unclear, was appointed by Judge Bert Richardson, who continues to preside over the case.
Richardson, a Bush appointee, identifies himself as a conservative. He serves as a senior judge in regions spanning the area from San Antonio to Del Rio and Austin to El Paso.
In his current campaign for a seat on the Court of Criminal Appeals, Richardson has the endorsements of groups that include Conservative Republicans of Texas, Kaufman County Tea Party, and the Texas Coalition of Christian Candidates
• Aug. 12, 2013: The Travis County commissioners direct the budget office to move $1.76 million to the Travis County District Attorney’s Public Integrity Unit. Lehmberg will also contribute $734,000 from another account.
• Aug. 19, 2013: McCrum takes the oath to investigate whether Gov. Perry committed crimes when he vetoed funding for the Travis County Public Integrity Unit.
• Sept. 6, 2013: The judge overseeing the criminal complaint against Perry chooses members of the grand jury.
• Oct. 4, 2013: A grand jury declines to indict Lehmberg on a complaint that she committed a felony when she threatened jailers following her drunk driving arrest.
• Dec. 3, 2013: A grand jury in Travis County indicts Cobbs for bypassing peer review in awarding an $11 million grant to Dallas-based Peloton.
Announcing the Cobbs indictment, Travis County Assistant District Attorney Rob Drummond says that the grand jury was asked to review the materials stemming from the MD Anderson IACS controversy and materials related to CTNeT, a now-defunct statewide network focused on cancer clinical trials. “The grand jury didn’t choose to issue indictments related to those matters,” Drummond said (The Cancer Letter, Dec. 17, 2013).
The Public Integrity Unit also investigated the allegations of conflicts of interest and financial improprieties related to the CPRIT Foundation, and conflicts related to the business interests of members of CPRIT’s oversight committee. However, these matters were not presented to the grand jury, Drummond said. Investigators saw no fault on the part of Peloton.
“No charges were considered against anyone connected to Peloton,” Drummond said. “The evidence indicated that they were unaware that their grant award had bypassed the required review committees.”
The company received a portion of the $11 million awarded by the state, and has since reapplied to receive the rest of the funds, but has not as yet received any additional funding.
Peloton was founded by Steven McKnight, who holds the Distinguished Chair in Basic Biomedical Research and the Sam G. Winstead and F. Andrew Bell Distinguished Chair in Biochemistry at UT Southwestern. He is a member of the National Academy of Sciences.
Prosecutors said they would seek no additional indictments on matters connected to CPRIT.
• Dec. 11, 2013: Visiting Judge David Peeples denies the state’s petition to remove Lehmberg from office.
• Aug. 15, 2014: A Travis County grand jury indicts Gov. Perry for two felony counts: abuse of official capacity and coercion of a public servant.
In a statement issued the next day, Perry says he is a victim of political prosecution:
“This indictment amounts to nothing more than an abuse of power and I cannot, and will not, allow that to happen. I intend to fight against those who would erode our state’s constitution and laws purely for political purposes, and I intend to win. I will explore every legal avenue to expedite this matter and bring it to a swift conclusion. I am confident we will ultimately prevail, that this farce of a prosecution will be revealed for what it is, and that those responsible will be held to account.”
• Aug. 19, 2014: Perry is booked.