By Jim Forsyth

SAN ANTONIO (Reuters) - Three men were arrested and a fourth is being sought by the FBI in connection with what investigators said was a scheme to market stem cells as miracle cures to desperate people suffering from terminal diseases.

"Protecting the public from unproven and potentially dangerous drug and medical procedures is very important," said U.S. Attorney Kenneth Magidson. "This office will continue to prosecute violations involving threats to the public health."

The arrests began in the last ten days after two indictments were issued in November charging the four with 39 counts of mail fraud and unlawfully manufacturing, distributing, and selling stem cells and stem cell procedures not approved by the Food and Drug Administration.

One of the four men charged, Vincent Dammai, 40, of Mount Pleasant, South Carolina, was identified as a researcher at the Medical University of South Carolina. The FBI said he used university facilities to create stem cells without obtaining permission from the FDA or university officials.

Francisco Morales, 52, of Brownsville, Texas, is charged with falsely saying that he was a medical doctor who operated a clinic in Brownsville that specialized in using stem cells to treat "incurable diseases."

Also charged is Alberto Ramon, 48, of Del Rio Texas, a licensed midwife who prosecutors said obtained umbilical cord blood to create stem cells from his patients at a maternity care clinic.

A fourth man, Lawrence Stowe, 58, of Dallas remains at large and a warrant has been issued for his arrest. The indictment charges that Stowe, who sometimes referred to himself as "Dr. Larry Stowe" "marketed, promoted, and sold stem cells" for the treatment of several diseases through front companies.

The CBS News program 'Sixty Minutes' profiled Stowe in 2010, interviewing an ALS patient who said Stowe told him his stem cell therapy could reverse and cure the debilitating and often fatal disease, a claim which is false. There is no cure for ALS, which is also known as Lou Gehrig's Disease, and there is no treatment which can reverse the symptoms. Most patients die from the disease within five years, according to the ALS Association.

"The investigation identified a scheme whereby the suffering and hopes of victims in extreme medical needs were used and manipulated for personal profit," Cory Nelson, Special Agent in Charge of the FBI's San Antonio office said on Friday.

Nelson says Morales would meet people in the United States to sell them the procedures, then travel to Mexico to perform them.

Dr. Craig Klugman, a medical ethicist at the University of Texas Health Science Center in San Antonio, said stem cells appeal to people who are desperate for cures.

"They are using a new marketing tool to make you think this is something very futuristic and cutting edge," Klugman told Reuters. "I would be very skeptical of anything claiming to have stem cells in it, because, at least in the United States, there is nothing commercially approved for use with stem cells in it."

He said products are being marketed as 'wrinkle creams' or 'wrinkle removers' which contain 'stem cells' for the same reason.

The FBI said the men received more than $1.5 million from patients suffering from incurable diseases.

"As a result of this fraudulent scheme, the public was mislead into believing that stem cells and other drug and biological products sold by the defendants had been approved by the FDA to treat cancer, ALS, MS, and Parkinson's disease," Nelson said.

(Editing by Greg McCune)