Biotech CEO Pleads Guilty to COVID-19 Securities Fraud Scheme
Summary
A Department of Justice Office of Public Affairs press release dated Friday, December 8, 2023, announcing that Keith Berman, 70, of Westlake Village, CEO and sole director of Decision Diagnostics Corp. (DECN), pleaded guilty to securities fraud, wire fraud and obstruction of an official proceeding. It states that he made false and misleading statements about the purported development of a new blood-based COVID-19 test, leading to millions of dollars in investor losses. According to court documents, he wrote in internal emails that he needed a "new story" to "raise millions," and spent company money on personal expenditures despite claiming not to take compensation. The release number is 23-1394.
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Press Release Biotech CEO Pleads Guilty to COVID-19 Securities Fraud Scheme Friday, December 8, 2023 For Immediate Release Office of Public Affairs A California man pleaded guilty yesterday to securities fraud, wire fraud, and obstruction of an official proceeding in connection with his scheme to defraud investors by making false and misleading statements about the purported development of a new, blood-based COVID-19 test, leading to millions of dollars in investor losses. According to court documents, Keith Berman, 70, of Westlake Village, was the CEO and sole director of Decision Diagnostics Corp. (DECN), a public medical device company. Berman and DECN were in precarious financial condition in the lead up to the COVID-19 pandemic, and Berman wrote in internal emails that he needed a “new story” to “raise millions.” Additionally, Berman had spent hundreds of thousands of dollars of company money on personal expenditures, despite publicly claiming not to take any compensation. Faced with these financial difficulties, from February through December 2020, Berman engaged in a scheme to defraud investors by falsely claiming that DECN had developed a 15-second test to detect COVID-19 in a finger prick sample of blood. Despite his claims to the investing public, Berman knew that no such test existed. Berman also falsely told investors that the Food and Drug Administration (FDA) was on the verge of approving DECN’s request for emergency use authorization of its purported COVID-19 test. In truth, Berman knew that his company was unwilling and unable to meet the clinical testing required by the FDA but concealed these material facts and misled investors. As part of the alleged scheme, Berman used a fake persona to repeat false and misleading statements to investors on internet message boards, and to lull unsuspecting investors into inaction by refuting allegations of fraud and threatening potential whistleblowers with civil or criminal sanctions. Berman also obstructed a U.S. Securities & Exchange Commission (SEC) investigation into his conduct, using another false online identity to surreptitiously direct an investor to write a series of false and threatening letters to the highest levels of SEC management, including the SEC Chairman. Berman pleaded guilty to one count each of securities fraud, wire fraud, and obstruction of an official proceeding. He is scheduled to be sentenced on April 12, 2024, and faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group, and Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division made the announcement. USPIS and the FBI investigated the case. Trial Attorneys Christopher Fenton, Kate T. McCarthy, and Matthew Reilly of the Criminal Division’s Fraud Section are prosecuting the case. Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form . Updated February 6, 2025 Topics Coronavirus Financial Fraud Securities, Commodities, & Investment Fraud Components Criminal Division Criminal - Criminal Fraud Section Federal Bureau of Investigation (FBI) Criminal Investigative Division (FBI) Press Release Number: 23-1394 Related Content Press Release Former Vice President and Controller of Publicly Traded Company Pleads Guilty to Insider Trading A Florida man pleaded guilty today in the Southern District of Florida for his role in an insider trading scheme that netted him over $1.6 million in illicit profits.A Florida... February 4, 2025 Press Release Former Finance Minister of Mozambique Sentenced in $2B Fraud and Money Laundering Scheme The former Finance Minister of Mozambique was sentenced today to 102 months in prison for his role in a $2 billion international fraud, bribery, and money laundering scheme, in which he... January 17, 2025 Press Release Justice Department Recovers an Additional $20M in Misappropriated 1MDB Funds The Justice Department announced today that it has reached an agreement to recover an additional $20 million in misappropriated 1Malaysia Development Berhad (1MDB) funds. In June 2024, the department announced it... January 17, 2025
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