Keith Berman's Sentencing Memorandum — United States v. Berman (Document 195)

Summary

Keith Berman's Sentencing Memorandum, filed April 6, 2024 as Document 195 in No. 1:20-cr-00278-TNM, signed by Kevin B. Collins of Covington & Burling LLP and others for the defendant. It states that Berman is 70 years old, has no criminal record, and committed securities fraud, wire fraud and obstructed justice by issuing press releases misstating the status of a COVID-19 blood test project. It argues that the PSR's loss amount calculation is erroneous, that the government has not proven substantial financial hardship, and that the sophisticated means enhancement does not apply. The memorandum puts the total offense level at 10 and asks for a sentence of time served.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Cite this document

“Keith Berman's Sentencing Memorandum — United States v. Berman (Document 195).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-d-d-c-no-1-20-cr-00278-dkt-195-d-d-c-0d19fd7628/, SHA-256 cbf447737bdcea1fc865569c2ab4f5eca24db17be751fbaa8a92cb4ae9b46085.

Full text

Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 1 of 38

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

UNITED STATES OF AMERICA )
)
) CRIMINAL NO. 20-CR-278-TNM
v. )
)
KEITH BERMAN, )
)
Defendant. )

KEITH BERMAN’S SENTENCING MEMORANDUM
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 2 of 38

TABLE OF CONTENTS

Page

INTRODUCTION .......................................................................................................................... 1

KEITH BERMAN’S BACKGROUND.......................................................................................... 2

I. MR. BERMAN’S PERSONAL LIFE ................................................................................. 2

II. MR. BERMAN’S HISTORY OF PRODUCT DEVELOPMENT ..................................... 3

III. GENVIRO! – DECN’S COVID-19 TEST ......................................................................... 4

IV. MR. BERMAN’S MEDICAL CONDITIONS ................................................................... 5

ARGUMENT .................................................................................................................................. 6

I. THE SENTENCING GUIDELINES .................................................................................. 6

A. The PSR’s Loss Amount Calculation Is Erroneous ................................................ 6

1. The fraud was disclosed before the indictment was unsealed. ................... 6

2. The government has not met its burden on reliance. .................................. 9

3. It is not a requirement to find loss to sentence a fraud defendant............. 12

B. The Government Has Not Proven Substantial Financial Hardship ...................... 14

C. The Enhancement for Sophisticated Means Does Not Apply ............................... 15

D. Mr. Berman Has Accepted Responsibility ............................................................ 17

E. Mr. Berman Should Receive the Zero-Point Offender Downward
Adjustment ............................................................................................................ 19

F. Mr. Berman’s Total Offense Level Is 10 ............................................................... 20

G. A Downward Departure is Warranted if the Court Adopts the Government’s
Loss Amount ......................................................................................................... 21

II. THE STATUTORY SENTENCING FACTORS SUPPORT A SENTENCE OF
TIME SERVED................................................................................................................. 22

A. Nature and Circumstances of the Offense Do Not Support a Lengthy
Sentence ................................................................................................................ 23

1. Mr. Berman put genuine effort into developing a COVID-19 test. .......... 23

i
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 3 of 38

2. Mr. Berman consulted with regulatory lawyers to get GenViro!
cleared by the FDA. .................................................................................. 25

B. Mr. Berman’s History and Characteristics Do Not Support a Lengthy
Sentence ................................................................................................................ 25

C. A Long Sentence Is Not Necessary to Afford Adequate Deterrence or
Protect the Public .................................................................................................. 27

1. Specific deterrence is not served by a lengthy sentence because Mr.
Berman is unlikely to repeat his crime. .................................................... 27

2. General deterrence of crime does not support a lengthy sentence. ........... 29

D. The Seriousness of the Offense, Respect for the Law, and Just Punishment
Do Not Support a Lengthy Sentence .................................................................... 30

E. The Need to Avoid Unwarranted Sentencing Disparities Supports a Shorter
Sentence ................................................................................................................ 31

CONCLUSION ............................................................................................................................. 33

ii
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 4 of 38

INTRODUCTION

Keith Berman is 70 years old. He has no criminal record. For most of his life, he developed

devices that helped patients get the medical care they needed. Over the last 20 years, he sold

affordable and reliable diagnostic devices that helped diabetics monitor their blood glucose levels.

These devices worked using impedance spectroscopy, a sophisticated technology that can detect

the electrochemical signature of a blood sample. In late February 2020, as demand for COVID-

19 tests exploded, Mr. Berman believed that he could leverage his knowledge of this technology

to invent a device that could detect COVID-19 in blood. He consulted with experts in the United

States and Korea to work up design specifications, and he hired FDA-savvy counsel to try and get

the requisite approvals. At the time, however, Mr. Berman needed money, so he issued press

releases misstating the status of his project to raise the funds needed to complete it and personally

enrich himself from the company’s success. In the process, Mr. Berman committed securities

fraud, wire fraud, and obstructed justice. When the time came, Mr. Berman took responsibility for

his offenses and pled guilty.

Since March of last year, Mr. Berman has been incarcerated. These days, he suffers from

several acute medical issues.

As the Court prepares to sentence Mr. Berman, it must consider this whole picture before

choosing the appropriate punishment. See Concepcion v. United States, 597 U.S. 481, 491 (2022)

(noting the court’s “responsibility to sentence the whole person before them”). Multiple
1
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 5 of 38

individuals have written to the Court to help with that process. They are friends and business

associates who have known the real Keith Berman for years. They know him as “kind,” “friendly,”

“honest,” “savvy,” “innovative,” “insightful,” “bright,” “caring,” and fundamentally, “good.” Exs.

A–H (letters and affidavits in support).

Because Mr. Berman has already spent over one year incarcerated, he respectfully submits

that the appropriate sentence is time served. The government has not met its burden to justify the

application of various Guidelines enhancements that it seeks to apply, including loss amount,

substantial financial hardship, and sophisticated means. And even if this Court believed that those

enhancements did apply, a sentence of time served is “sufficient, but not greater than necessary,”

to achieve the purposes of sentencing under 18 U.S.C. § 3553(a).

KEITH BERMAN’S BACKGROUND

I. MR. BERMAN’S PERSONAL LIFE

Born in 1953, Mr. Berman grew up in St. Louis, Missouri. His father was a family

physician, and his mother worked for the local school district. From the outside, Mr. Berman’s

childhood should have been ordinary—but it was far from that. He suffered brutal mental and

emotional abuse from his mother throughout his childhood.

And while attending college at Indiana University in Bloomington, Mr.

Berman’s father passed away. Simply put, Mr. Berman’s early years were fraught.

As an escape, Mr. Berman restored antique radios. He enjoyed working with his hands and

was intrigued by the technology inside the radios he restored. He also played hockey, and even

became quite proficient at the sport. In college, Mr. Berman played for Indiana University’s club

hockey team while he pursued his undergraduate degree. See Ex. I (photograph of Indiana

2
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 6 of 38

University club hockey team in 1974–1975 yearbook). 1 In 1975, he obtained his bachelor’s degree

from Indiana University, and two years later he obtained his Master’s in Public Affairs.

In 1980, Mr. Berman began a romantic relationship with Wendy Block, a schoolteacher.

Although they never married, they lived together for over forty years and had a son, Zachary

Berman. Mr. Berman was heavily involved in Zachary’s childhood. He chaperoned school field

trips, coached Zachary’s high school baseball team, and dutifully supported his son as he got his

medical degree. Mr. Berman raised his son well. His son is currently a radiologist and an Assistant

Clinical Professor of Radiology at the University of California, San Diego, and he has over 15

different academic publications in his field. 2 While Mr. Berman and his son were close for most

of his son’s life, their relationship became strained after Mr. Berman was arrested for this offense.

His relationship with Wendy became strained then, too. She was traumatized when officers arrived

at her home unannounced to arrest Mr. Berman.

II. MR. BERMAN’S HISTORY OF PRODUCT DEVELOPMENT

After obtaining his Master’s degree, Mr. Berman embarked on a prolific and successful

career in product development. He began at Technicon, a medical device firm that manufactured

devices that analyzed human blood. While there, he successfully organized and designed a

multiphasic screening tool, an experience he leveraged at his next job with Boehringer Mannheim

(now Roche), a pharmaceutical and medical supply company. At Boehringer Mannheim, Mr.

Berman was a program manager, overseeing the development and approval of various medical

devices the company intended to sell. During his time at the company, Mr. Berman became adept

at navigating the FDA’s processes and procedures for obtaining “510(k) clearance” of medical

1
The full Indiana University yearbook for 1974–1975 can be found here:
https://issuu.com/arbutusyearbook/docs/1975_arbutus.
2
See UCSD Profiles, Zachary Berman, https://profiles.ucsd.edu/zachary.berman (last visited April
1, 2024).
3
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 7 of 38

devices. 3 Eventually, Mr. Berman decided to leave Boehringer Mannheim and start his own

company, Access Health, which developed laboratory computer systems that were designed to

handle all the logistical functions necessary to run a testing laboratory.

Mr. Berman engaged in a few other successful ventures in the years that followed, and by

the early 2000s, he was selling diabetic test strips and wound care products. He did this under

several different company names, the latest being Decision Diagnostics (“DECN”). As the leader

of DECN, Mr. Berman developed and sold glucose test strips that utilized a sophisticated

technology, known as “electrochemical impedance spectroscopy,” to detect the electrochemical

signature of a blood sample. Using this technology, Mr. Berman’s glucose tests were quick,

reliable, and more affordable than name-brand competitors. To ensure that he complied with FDA

requirements, Mr. Berman hired counsel experienced with the FDA’s regulatory framework for

medical devices. See Ex. F, Affidavit of M. DuVal at 3–6. Mr. Berman also worked with a Korean

biotechnology company, The Bio, and a scientist based in the United States, Dr. Matthew Musho,

to develop DECN’s glucose test strips. See Ex. B, Letter from D. Kim at 1; Ex. F, at 3–4.

III. GENVIRO! – DECN’S COVID-19 TEST

In late February 2020, Mr. Berman learned that The Bio had halted its production

operations because officials in Daegu, South Korea had ordered citizens to shelter in place to stem

the spread of COVID-19. Foreseeing the demand for COVID-19 test kits, Mr. Berman hoped to

leverage his company’s expertise in impedance spectroscopy to detect COVID-19 in blood. To

3
The 510(k) process is the method by which medical device manufacturers get clearance from the
FDA to market certain eligible products in the United States. “The 510(k) clearance process
involves a comprehensive review of safety and performance data for the device, which may include
scientific, non-clinical, and clinical data, as appropriate, to determine if a new device is
substantially equivalent to a device that is already on the market.” United States Food and Drug
Administration, Medical Device Safety and the 510(k) Clearance Process,
https://www.fda.gov/medical-devices/510k-clearances/medical-device-safety-and-510k-
clearance-process (last visited March 31, 2024).
4
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 8 of 38

develop this idea, Mr. Berman consulted with Daniel Kim, the owner of The Bio, who believed

that such a test was theoretically possible and shared a peer-reviewed article that explained how

impedance spectroscopy could detect viruses in biological samples. ECF No. 179-1 (e-mail from

D. Kim to K. Berman).

To obtain FDA clearance for GenViro!, Mr. Berman hired the same counsel that worked on

with him on glucose testing. See Ex. E, Affidavit of L. Pritchard ¶ 3; Ex. F, at 6–7. Mr. Berman,

however, did not have the funds necessary to complete the project. To obtain the money he needed

and to enrich himself, Mr. Berman released press releases misstating the status and development

of GenViro!, starting in March 2020. During that time, Mr. Berman ran into challenges getting an

at-home blood-based COVID-19 test to work. So in July 2020, DECN decided to tack a different

course and switched to a design that used human saliva, which the company announced in a press

release. See Ex. J, DECN July 10, 2020 Press Release at 1–2 (announcing “plans to provide a new

single-use saliva testing kit option”). The company continued its efforts to develop a saliva test

throughout the rest of 2020 and into 2021, developing schematics and a sample device that

contained several working components. See Ex. K, Affidavit of Dr. Williams ¶¶ 6–9; Ex. L,

GenViro! saliva test presentation; see also Ex. M, Schematics of GenViro! electrode.

IV. MR. BERMAN’S MEDICAL CONDITIONS

Over the last few years, Mr. Berman has suffered from a variety of chronic medical

conditions.

5
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 9 of 38

Throughout his life, Mr. Berman rarely drank

and never abused any illicit substances. Id. ¶ 84.

ARGUMENT

I. THE SENTENCING GUIDELINES

To impose a valid sentence, the Court must first calculate the appropriate Guidelines range.

See Gall v. United States, 552 U.S. 38, 49 (2007) (“[A] district court should begin all sentencing

proceedings by correctly calculating the applicable Guidelines range”). Mr. Berman’s total offense

level is 10 and he has no criminal history, which means the appropriate Guidelines range is 6–12

months’ imprisonment.

A. The PSR’s Loss Amount Calculation Is Erroneous

The PSR incorrectly adopts the government’s asserted loss figure of “at least $27.8

million.” PSR ¶ 49. This calculation is erroneous for the reasons articulated by Mr. Berman in

brief (ECF No. 179) and during oral argument at the March 20, 2024 hearing on loss amount,

which are hereby incorporated in this Sentencing Memorandum. It is also erroneous for the

reasons discussed below.

1. The fraud was disclosed before the indictment was unsealed.

As the evidence at the March 20, 2024 hearing demonstrated, the fraud was publicly

revealed to investors multiple times before the indictment was unsealed. On April 23, 2020, the

SEC issued a release publicly questioning “the accuracy and adequacy” of the press releases issued

by DECN, including claims that DECN had the “technology perfected” for a COVID-19 blood test

that would provide results “in 15 seconds” and that “up to 525 million COVID 19 test kits would

be sold in the first year of production.” ECF No. 179-2, at 3 (DX-001 and DX-002 at March 20,

6
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 10 of 38

2024 hearing). 4 That same day, the SEC suspended trading of DECN, id., an action that the SEC

seldom takes, Ex. O, Tr. of March 20, 2024 Hr’g at 76:2–3 (“SEC trading suspensions are not

common events.”).

Then, on May 20, 2020, the SEC publicly released a declaration by SEC Senior Counsel

Carlisle E. Perkins, which stated unequivocally that “DECN Disseminated False and Misleading

Information in Press Releases” and specified all of the statements in the press releases that were

false and misleading. 5 ECF No. 179-3, at 6 (DX-004 at March 20, 2024 hearing) (emphasis

added). The allegations in the affidavit were extensive and mirrored the allegations in the

indictment against Mr. Berman. See ECF No. 179, at 19–22 (Def. Background Mem. for March

20, 2024 Hr’g) (comparing the allegations in the declaration and the affidavit side by side).

The SEC’s statements were picked up by at least July 20, 2020—and likely well before 6—

by over-the-counter (“OTC”) trading platforms, which (1) displayed a skull-and-crossbones image

next to DECN’s ticker, (2) included several bright red “Warning[s]!,” and (3) explained that the

platform “has discontinued the public display of quotes for [DECN] because it has been labeled

Caveat Emptor (Buyer Beware).” ECF No. 179-5 (DX-010 at March 20, 2024 hearing) (DECN

webpage on OTCMarkets.com) (color in original). At the March 20, 2024 hearing, the Court

4
For this Sentencing Memorandum, pincites for ECF citations are based on the ECF page number
unless otherwise indicated.
5
At the March 20, 2024 hearing, the government claimed that the indictment is “[t]he only time”
that the market was on notice that Mr. Berman was not “far along” in getting FDA approval for
GenViro!. Ex. O, at 128:10–17. This is false. The Perkins declaration directly stated, “At the
time of the March 3, 2020, press release – when DECN claimed that its ‘product’ would be
‘commercial [sic] ready in the summer of 2020’ – DECN had not applied for authorization from
the FDA to sell or distribute its COVID-19 test kit.” ECF No. 179-3, at 9.
6
As James Reilly testified at the March 20, 2024 hearing: “I know from my industry experience
that as soon as the stock was suspended, OTC Markets, one, stopped trading, as you saw from the
gap in one of the charts we reviewed earlier. And, two, these warnings would be appended to the
stock from the resumption of trading forward.” Ex. O, at 68:21–69:1. The government offered no
evidence to rebut this testimony.
7
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 11 of 38

learned about the effect of the skull-and-crossbones/Caveat Emptor designation: if an investor

wanted to invest in DECN after the trading suspension, he would have to call in the order, upon

which “the call center registered representative will read you a script that says: This is a

speculative security. You could lose all your money. It’s recently been suspended by the SEC.

Are you sure you want to enter this trade?” Ex. O, at 66:14–25 (emphasis added).

The government denies that these events disclosed the fraud. 7 Instead, the government

stresses that Mr. Berman resisted the SEC’s allegations and tried to convince others by defending

himself on internet message boards using an anonymous account. In its view, these actions vitiated

any otherwise valid disclosure. But this argument does not make sense. If the fraud was not

disclosed to the market by any of the dates offered by Mr. Berman because he challenged the

government’s claims, then the disclosure date could not possibly be the date his indictment was

unsealed either. Mr. Berman publicly challenged the charges against him well after he was

indicted. And no party is arguing that disclosure under the Guidelines occurs only when a

defendant pleads guilty—rightfully so, because such a rule is completely unsupported by the case

law. See, e.g., United States v. Peppel, 2011 WL 3608139, at *9 (S.D. Ohio Aug. 16, 2011) (“[T]he

announcement of the SEC investigation is an efficient and highly relevant proxy by which to

measure the price effects of the fraudulent conduct”); United States v. Schena, 2023 WL 7348458,

at *4 (N.D. Cal. Nov. 6, 2023) (Department of Justice Fraud Section arguing that the appropriate

disclosure date is “when the SEC suspended the trading for two weeks”); In re Merrill Lynch

7
The government’s expert, Dr. Mitts, admitted that “[t]he Government provided [him] with the
dates for the period of the fraud,” Ex. O, at 15:8–9. Dr. Mitts testified that determining those dates
fell outside the realm of his expertise, as it was “not a question that can be answered by financial
economics,” id. 16:16–17; see also id. 12:4–6 (recognizing Dr. Mitts as an expert in “financial
economics”).
8
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 12 of 38

Auction Rate Sec. Litig., 851 F. Supp. 2d 512, 527 (S.D.N.Y. 2012) (“[T]he SEC Order itself was

enough to disclose [the] market intervention.”). 8

What the case law does demonstrate is that full disclosure of every aspect of the defendant’s

misconduct is not required to trigger the disclosure date under the Guidelines. See, e.g., United

States v. Tuzman, 2021 WL 3284231, at *4 (S.D.N.Y. July 29, 2021) (fraud disclosed merely when

a company issued a Form 8-K “announcing errors and irregularities in its financial statements from

prior years”); Peppel, 2011 WL 3608139, at *9 (“announcement of the SEC investigation”

sufficient). This makes sense—the further out the disclosure date is pushed, the more likely non-

fraud events influence the price of the stock. See infra at 11–12 (discussing non-fraud events).

Yet in measuring loss, this Court must try to isolate the price effects of the fraud alone.

Accordingly, the government’s attempt to extend the disclosure date well beyond what the facts or

the law supports should be rejected.

2. The government has not met its burden on reliance.

To prove loss, the government must prove that the loss “resulted from the offense.”

Application Note 3(A)(i) to U.S.S.G. § 2B1.1 In other words, the government must prove

causation. United States v. Stein, 846 F.3d 1135, 1152 (11th Cir. 2017) (holding that Guidelines

definition of actual loss “incorporates a causation standard that, at a minimum, requires factual

causation (often called ‘but for’ causation)” (cleaned up)); United States v. Evans, 744 F.3d 1192,

1196 (10th Cir. 2014) (“[Section] 2B1.1 incorporates and requires both factual or ‘but for’

8
The government seemingly attempts to get around this by claiming that Mr. Berman’s subsequent
obstructive conduct was important information about the fraud that investors needed to know. That
is the opposite of what the government has said previously about the fraud charges in this case.
See ECF No. 179-6, at 24:4–7, 27:4–6 (Tr. of Nov. 13, 2023 Hr’g) (government asserting that the
indictment “is focused exclusively on false statements about the blood test,” which “are made
from March to July 2020,” and that its “allegations of fraud all center around [Mr. Berman’s]
statements about a blood test that his company was developing” (emphasis added)). And as noted
above, that is also inconsistent with what the cases say.
9
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 13 of 38

causation and legal or foreseeable causation.”). That means the government must demonstrate that

all losses in its loss calculation come from “reliance” on Mr. Berman’s fraudulent conduct. Stein,

846 F.3d at 1154; see also United States v. Bazemore, 839 F.3d 379, 390 (5th Cir. 2016); United

States v. Nacchio, 573 F.3d 1062, 1078 (10th Cir. 2009). “Losses from causes other than the fraud

must be excluded from the loss calculation.” United States v. Ebbers, 458 F.3d 110, 128 (2d Cir.

2006).

The government has not met its burden. At the March 20, 2024 hearing, which was held

specifically to determine loss amount, the government failed to call a single investor to testify

about why he or she invested in DECN. It adduced no evidence about what an investor considered

before investing in DECN, when they invested in DECN, how much they invested in DECN, or

why they ignored the warnings from the SEC and the trading platforms about DECN. The PSR

lists individuals that claimed to have suffered loss from the press releases, but this is not sufficient

to establish that Mr. Berman’s conduct caused loss. There is no evidence confirming when these

individuals invested in DECN, what they viewed before investing in DECN, or whether they sold

their stock in DECN. See Stein, 846 F.3d at 1154 (“trial testimony from one investor,” “a number

of victim impact statements,” and testimony that “the only place to get information about [the

company’s] stock was from press releases and public filings” was “insufficient to support the

inference that all 2,415 investors relied on [the defendant’s] fraudulent information when deciding

to purchase [the company’s] stock”). In fact, evidence suggests that some investors did not rely

on Mr. Berman’s press releases about the COVID-19 blood test, and others sold their stocks for a

profit. See, e.g., Ex. P, USPS Interview of B.S. at 1 (Aug. 3, 2021) (investor indicating that he sold

his stock for profit in June 2020 and re-invested based on DECN’s saliva test); Ex. Q, Timothy

Sykes, How I Called the Best Morning Panic So Far This Year, Penny Stocks News (Apr. 16,

10
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 14 of 38

2022) (DX-005 at March 20, 2024 hearing) (documenting price-movement reasons for investing

in DECN in 2020 that are totally divorced from DECN’s actual business and discussing profits

made from those trades). 9

The evidence that the government did present—the testimony of Dr. Mitts—was

insufficient to establish that its proposed loss amount was attributable to Mr. Berman’s fraudulent

conduct. Dr. Mitts conceded that it is not possible to assess the reasonableness of a loss amount

estimate without a close analysis of firm-specific facts. Ex. O, at 118:25–119:5 (“One needs to

consider the totality of the evidence and what happened to determine whether or not the loss

amount was reasonable.”). However, at the hearing and in his expert disclosure, Dr. Mitts did not

offer any testimony explaining how he “[g]enerally” looked at firm-specific facts, conditions, and

events. Id. at 118:12. In fact, Dr. Mitts testified that his regression modeling could not address

this question at all. Id. at 45:11–20 (“For purposes of this analysis, I did not evaluate with a

regression analysis firm-specific facts. I don’t believe it’s possible to do that . . . ” (emphasis

added)).

Multiple firm-specific factors could explain DECN’s price trend in 2020 following

disclosure of the fraud. For example, there were ongoing developments at DECN that were

unrelated to the charged conduct. In particular, it is undisputed that DECN announced it was

switching to a saliva test in July 2020. Ex. J (press release announcing saliva test); see also ECF

No. 37 (Gov’t Reply in Supp. of Mot. in Limine) (acknowledging “the defendant’s July 2020

announcement that he planned to develop a COVID-19 saliva test”). And record evidence shows

9
Further highlighting the importance of corroborative evidence, Alpha Credit Resources LLC,
another purported victim according to the PSR, “indicated a civil suit was filed on [its] behalf” in
the Eastern District of New York, PSR ¶ 35, but it did not mention that this case was dismissed
with prejudice in September 2022 following a settlement, Cyganowski v. Decision Diagnostics
Corp., 2:21-cv-00888 (E.D.N.Y. Sept. 23, 2022), ECF No. 23.
11
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 15 of 38

that investors relied on that information when investing in DECN. See, e.g., Ex. P, at 1 (investing

based on DECN’s saliva test and entrance into X-Prize, a competition that involved the saliva test).

Critically, the government has said repeatedly that Mr. Berman’s fraudulent conduct has nothing

to do with the development of his saliva test. See ECF No. 179, at 13 (documenting government’s

statements).

As yet another potential explanation, the DECN price trend could reflect a speculative

bubble. As James Reilly testified, “traders and speculators in this section of the market . . . might

look at a stock chart and nothing else and make a decision.” Ex. O, at 78:18–79:12 (providing

explanations for continued trading after the disclosure of the fraud). Record evidence confirms

that this is true. See Ex. Q, at 2–13 (discussing trading of DECN in April 2020 based solely on

price chart). Accordingly, it is entirely possible that post-July 2020 price movements resulted from

non-fraudulent conduct. Dr. Mitts offered no testimony explaining how he distinguished among

these firm-specific factors as potential explanations for DECN’s price trend. Rather, the

government simply asserts that Mr. Berman prevented the fraud from being disclosed and that

explains DECN’s price trend in 2020 without considering other firm-specific facts, conditions, and

events. This ipse dixit runs in stark contrast to the command that “causes other than the fraud must

be excluded from the loss calculation.” 10 Ebbers, 458 F.3d at 128.

3. It is not a requirement to find loss to sentence a fraud defendant.

When crafting a sentence for defendants convicted of fraud-related offenses, federal courts

look to U.S.S.G. § 2B1.1 to determine the appropriate offense level. Subsection (a) sets out a base

10
Should the Court decide to forego the Guidelines method for calculating loss, it must employ a
method that appropriately removes the non-fraud value of DECN stock. See Ebbers, 458 F.3d at
128 (noting that loss calculation must focus only on losses caused by fraud). Put another way, it
would have to subtract the value of the stock if accurate press releases were issued from the total
stock price in order to isolate what was actually caused by Mr. Berman’s fraudulent conduct.
12
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 16 of 38

offense level applicable to all defendants (7 if certain conditions are met, otherwise 6), and

subsection (b) outlines 20 different enhancements that, if proven by the government to be

applicable, can modify the offense level. See U.S.S.G. § 2B1.1(a)–(b).

Loss amount is just one of those 20 enhancements—subsection (b)(1). A finding of loss is

not necessary to find a defendant guilty of fraud, nor is it necessary to adequately sentence a

defendant for fraudulent conduct. “[S]ections 2B1.1(a) and 2B1.1(b)(1) plainly perform different

functions in the Guidelines calculus: the court applies section 2B1.1(a) in response to the

defendant’s admittedly fraudulent conduct, but the sole question under section 2B1.1(b)(1) is

whether the defendant’s fraudulent conduct resulted in pecuniary loss warranting a further increase

in his base offense level.” United States v. Crummy, 249 F. Supp. 3d 475, 484–85 (D.D.C. 2017)

(Brown Jackson, J.). As then-Judge Brown Jackson ruled, “it is not necessarily troubling” when

loss amount is zero under the Guidelines method, because the defendant still “has committed a

federal offense” and is subject to a term of imprisonment under the Guidelines. Id. at 485 (finding

loss amount of zero because government did not present sufficient evidence supporting its loss

amount claim under Guidelines method); see also United States v. Block, No. 1:16-cr-595

(S.D.N.Y. Dec. 4, 2017), ECF No. 169 at 31, 68–71 (declining to apply a loss amount of $300

million dollars because the government failed to meet its burden, and instead finding no loss

despite defendant “brazenly” manipulating financial results to cover up problems in past

disclosures). Moreover, in cases where U.S.S.G. § 2B1.1 metes out an offense level that, in the

sentencing court’s view, “substantially understates the seriousness of the offense,” the Guidelines

state that “an upward departure may be warranted.” Application Note 21(A) to U.S.S.G. § 2B1.1;

Crummy, 249 F. Supp. 3d at 484 (“[T]o the extent that the offense level does not reflect the full

extent of the harm suffered, a court may depart on that basis alone”).

13
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 17 of 38

At bottom, the sentencing court need not—and should not—eschew a faithful application

of the Guidelines method for calculating loss even if loss is zero. The government, asserting a loss

amount of millions based on illogical arguments and no case-law support, does precisely that. The

Court should not oblige.

B. The Government Has Not Proven Substantial Financial Hardship

As with loss amount, the government must prove that Mr. Berman’s fraudulent conduct

was both the but-for and proximate cause of any investor’s substantial financial hardship for the

Guidelines enhancement to apply. United States v. Skouteris, 51 F.4th 658, 673 (6th Cir. 2022)

(“But-for causation requires that the ‘substantial financial hardship’ could not have occurred

without the underlying offense, whereas proximate causation requires the harm to be the

foreseeable result of the wrongful act.”); United States v. George, 949 F.3d 1181, 1187 (9th Cir.

2020) (“Section 2B1.1(b)(2) refers to conduct that ‘resulted in’ substantial financial hardship,

language that we have interpreted to impose a causation requirement. As relevant here, that

requirement embraces two distinct concepts: but-for causation and proximate causation.” (citation

omitted)).

The same arguments regarding the government’s failure to demonstrate reliance for loss

amount therefore apply with equal force to the substantial financial hardship enhancement. See

supra at 6–12. The government’s claim for substantial financial hardship is premised on erroneous

fraud periods and disclosure dates that extend the period far beyond what was reasonably caused

by Mr. Berman’s fraudulent conduct. Furthermore, the government did not have a single investor

testify about why he or she invested in DECN stock. Nor did the government present any evidence

corroborating what an investor viewed before investing in DECN, when they invested in DECN,

or how much they invested in DECN. And that concern is not merely academic. Even on the

limited evidence the government has, the record reveals that multiple investors listed in the PSR
14
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 18 of 38

invested based on DECN’s saliva test, not the blood test. See Ex. P (selling for a profit and then

investing based on the saliva test); Ex. R, Victim Impact Statement of J.D. (investing based on

DECN’s saliva test and participation in X-Prize, a competition involving the saliva test that

occurred in late 2020).

The government cites United States v. Sunmola, 887 F.3d 830 (7th Cir. 2018) to defend its

failure to call any investors at the evidentiary hearing or present any corroborating evidence at

all. See ECF No. 193, at 14–15. But Sunmola does not support the government. First, multiple

victims “testified at trial” in Sunmola. 887 F.3d at 836. Second, unlike here, the defendant had

the PSR for six months before the sentencing hearing to verify the claims that were

made. Id. Third, and most importantly, Sunmola had nothing to do with reliance, see id., which

is critical in this case. As the Eleventh Circuit held, “a number of victim impact statements” are

insufficient to support the inference that “all . . . investors relied on [the defendant’s] fraudulent

information when deciding to purchase [the company’s] stock.” Stein, 846 F.3d at 1154. Instead

of remedying its failure, the government hides the issue in a footnote. See ECF No. 193, at 11. 11

C. The Enhancement for Sophisticated Means Does Not Apply

The PSR recommends a two-level enhancement to Mr. Berman’s offense level because his

offense conduct “involved sophisticated means” pursuant to U.S.S.G. §2B1.1(b)(10)(C). PSR

¶ 51. The justification in the PSR for the “sophisticated means” enhancement is that Mr. Berman

“used aliases to encourage investors to invest in DECN.” Id. This refers to the fact that, when

discussing DECN stock on public Internet message boards, Mr. Berman used a different name.

11
The government claims there is “no loss causation requirement in public enforcement actions,”
ECF No. 193, at 11 n.4, but the case it cites—S.E.C. v. Pace, 173 F. Supp. 2d 30, 33 (D.D.C.
2001)—had nothing to do with U.S.S.G. § 2B1.1, which requires that loss “result[] from the
offense,” to count for the purposes of the enhancement. Application Note 3(A)(i) to U.S.S.G.
§ 2B1.1 (emphasis added). The government’s argument should receive short shrift.
15
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 19 of 38

This conduct does not rise to the level of “sophisticated means” as contemplated by the

Guidelines. The Guidelines define “sophisticated means” as “especially complex or especially

intricate offense conduct pertaining to the execution or concealment of an offense.” Application

Note 9(B) to USSG 2B1.1 (emphasis added). To eliminate doubt about what that means, the

Guidelines provide examples:

1. [I]n a telemarketing scheme, locating the main office of the scheme in one
jurisdiction but locating soliciting operations in another jurisdiction ordinarily
indicates sophisticated means.

2. Conduct such as hiding assets or transactions, or both, through the use of
fictitious entities, corporate shells, or offshore financial accounts also ordinarily
indicates sophisticated means.

Id.

The conduct here—utilizing an alias on a public message board—is not nearly as

sophisticated as either of these examples. And while “the enhancement can apply to conduct less

sophisticated” than the examples in the Guidelines, it nevertheless must require conduct more

complex than merely setting up a fake account on an internet message board. United States v.

Milligan, 77 F.4th 1008, 1013 (D.C. Cir. 2023) (affirming, with “due deference,” the application

of the sophisticated means enhancement where the defendant “set[] up an email account in

[another’s] name, sen[t] communications from that account that purported to be from [that person],

and establish[ed] a mailbox in the name of [a fake company under that person’s name]” (emphasis

added)). 12

12
The government papers over this key difference between Milligan and this case by claiming that
the sophisticated means enhancement applied in Milligan because “among other things the
defendant set up an email address in another individual’s name.” ECF No. 193, at 14. But those
“other things”—i.e., setting up a mailbox in the name of a fake company—that the government
does not mention are critical in this case in determining whether the sophisticated means
enhancement applies. Indeed, they demonstrate that Milligan does not neatly fit with the facts
here.
16
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 20 of 38

D. Mr. Berman Has Accepted Responsibility

Despite pleading guilty to all pending charges before going to trial, the government

advances three reasons for its conclusion that Mr. Berman does not deserve a two-level credit for

accepting responsibility. See U.S.S.G. § 3E1.1(a). None persuades.

First, the government contends that Mr. Berman has not accepted responsibility because

he intended to have Dr. Williams testify about certain aspects of his COVID-19 test. ECF No. 177,

at 17 (Gov’t Evid. Br. for March 20, 2024 Hr’g) (“While the Defendant is entitled to present

evidence at this stage of the case, the presentation of Dr. Williams’s anticipated testimony is

inconsistent with acceptance of responsibility”). Mr. Berman has repeatedly told the government

that he does not intend to argue that he developed a working COVID-19 blood test, or that his

press releases were accurate. Indeed, Mr. Berman admits that his press releases were materially

false and misleading because they misstated the progress of DECN’s development of a COVID-

19 blood test. Through Dr. Williams, Mr. Berman merely intends to show the Court what work he

was doing to develop a COVID-19 test, which is relevant to the nature and circumstances of Mr.

Berman’s offense, his history and characteristics, and the sentence he should receive relative to

similarly situated defendants. See 18 U.S.C. § 3553(a)(1), (a)(6). Contrary to the government’s

position, a defendant is allowed to present evidence relevant to the sentencing factors in 18 U.S.C.

§ 3553(a) and still receive a credit for acceptance of responsibility—particularly where, as here,

the defendant admits that he is guilty of all the charged crimes.

Second, the government claims that Mr. Berman has not accepted responsibility because

his statement of offense is insufficient. See ECF No. 193, at 16–17. The government’s position

is puzzling. After all, the government explicitly told this Court that the statement of facts

supporting the guilty plea was adequate. And that statement substantially mirrors statement of

offense, which the government now finds wanting. The government was right the first time. Mr.
17
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 21 of 38

Berman admitted that he “willfully and intentionally made materially misleading statements, with

the intent to defraud, about the progress and status of DECN’s development of its COVID-19 blood

test” in “press releases [that] were issued to generate favorable publicity in an effort to attract a

larger corporate partner.” ECF No. 170, at 3. He also admitted that, “using an alias,” he “sent

private messages to an investor on the website Investors Hangout to influence the investor to draft

an independent ‘shareholder letter’ accusing the SEC of misconduct,” “assisted with the review of

the shareholder letter,” “authorized its submission to the SEC,” “recruit[ed] shareholders to sign

the letter,” “levied allegations of bias and collusion against SEC investigators” in the letter, “did

not reveal to shareholders or the SEC that he was behind the alias,” and “engaged in this conduct

to influence the SEC to end its investigation into DECN.” Id. at 3–4. Mr. Berman has fully

admitted to his misconduct.

Third, the government insists that Mr. Berman should not obtain the acceptance-of-

responsibility reduction because he has challenged the government’s proposed loss amount. See

ECF No. 193, at 17. Not so. As the government has argued repeatedly throughout this case, “loss

is not an element” of any of the charged crimes. Ex. O, at 87:13; see also ECF No. 145, at 25

(Gov’t Mot. to Exclude Proposed Expert Testimony) (moving to exclude Mr. Berman’s expert

because loss is not an element). Rather, loss is an enhancement under the Guidelines that the

government has the burden to prove. By challenging loss, then, Mr. Berman is not falsely denying

offense conduct.

Besides, courts routinely reduce sentences under U.S.S.G. § 3E1.1, even though defendants

challenge the government’s loss calculations. See, e.g., United States v. Locke

ECF No. 92, at 24 (D.D.C. Apr. 13, 2011) (reducing offense levels despite dispute over loss

calculations), aff’d, 664 F.3d 353 (D.C. Cir. 2011); Crummy, 249 F. Supp. 3d at 488 & n.5 (same);

18
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 22 of 38

United States v. Miller, 901 F. Supp. 371, 373–78 (D.D.C. 1995) (same); see also United States v.

Castillo, 779 F.3d 318, 325 (5th Cir. 2015) (holding that government may not oppose the

discretionary acceptance-of-responsibility reduction of U.S.S.G. § 3E1.1(b) on the grounds that

the defendant made a “good faith” argument challenging loss amount).

Mr. Berman is entitled to dispute the applicability of a sentencing enhancement under the

Guidelines and still receive credit for acceptance of responsibility. The government is merely

weaponizing its inability to reliably measure loss into a sword to punish Mr. Berman. That is

incorrect.

E. Mr. Berman Should Receive the Zero-Point Offender Downward Adjustment

Under U.S.S.G. § 4C1.1, a defendant with zero criminal history points—also known as a

“zero-point offender”—is eligible for an additional two-level downward adjustment to his offense

level if the following criteria are met:

1. the defendant did not receive any criminal history points from Chapter Four,
Part A;

2. the defendant did not receive an adjustment under § 3A1.4 (Terrorism);

3. the defendant did not use violence or credible threats of violence in connection
with the offense;

4. the offense did not result in death or serious bodily injury;

5. the instant offense of conviction is not a sex offense;

6. the defendant did not personally cause substantial financial hardship;

7. the defendant did not possess, receive, purchase, transport, transfer, sell, or
otherwise dispose of a firearm or other dangerous weapon (or induce another
participant to do so) in connection with the offense;

8. the instant offense of conviction is not covered by § 2H1.1 (Offenses Involving
Individual Rights);

9. the defendant did not receive an adjustment under § 3A1.1 (Hate Crime
Motivation or Vulnerable Victim) or § 3A1.5 (Serious Human Rights Offense);
and

19
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 23 of 38

10. the defendant did not receive an adjustment under § 3B1.1 (Aggravating Role)
and was not engaged in a continuing criminal enterprise, as defined in 21 U.S.C.
§ 848;

U.S.S.G. § 4C1.1(a).

There is no dispute that Mr. Berman has zero criminal history points. PSR ¶ 62. Nor is it

disputed that Mr. Berman satisfies at least nine of the ten requirements. As for the sixth

requirement, the government has not met its burden showing that Mr. Berman caused substantial

financial hardship. See supra at 14–15. Mr. Berman should therefore receive the two-level

downward adjustment for zero-point offenders.

F. Mr. Berman’s Total Offense Level Is 10

After removing the enhancements for loss amount, substantial financial hardship, and

sophisticated means, Mr. Berman’s adjusted offense level for Counts 1 and 2 is 9. 13 See PSR

¶¶ 48–56 (offense level of 9 after removing paragraphs 49, 50, and 51). That is lower than Mr.

Berman’s adjusted offense level for Count 3 (obstruction of justice), which is 14. See U.S.S.G.

§ 2J1.2. The offense level for Count 3 therefore controls the calculation of Mr. Berman’s total

offense level. See Application Note 8 to U.S.S.G. § 3C1.1. That results in a total offense level of

10 after taking into account acceptance of responsibility (-2 levels) and the “zero-point offender”

adjustment (-2 levels). The Guidelines range for a defendant with a total offense level of 10 and a

criminal history category of I is 6–12 months’ imprisonment.

13
Mr. Berman agrees with the government that the 4-level enhancement in U.S.S.G.
§ 2B1.1(b)(20) does not apply to him because he is not an officer or director of a “publicly traded
company,” as that term is defined in the Guidelines. See PSR at 27 (government asserting that
U.S.S.G. § 2B1.1(b)(20) does not apply to Mr. Berman). DECN, an OTC stock, was not on a
national securities exchange, and thus the company was not an issuer of “a class of securities
registered under section 12 of the Securities Exchange Act of 1934.” Application Note 1 to
U.S.S.G. § 2B1.1 (defining “publicly traded company”). Likewise, because DECN common stock
was traded OTC, DECN was generally not “required to file reports under section 15(d) of the
Securities Exchange Act of 1934.” Id.
20
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 24 of 38

G. A Downward Departure is Warranted if the Court Adopts the Government’s
Loss Amount

Application Note 21(C) to U.S.S.G. § 2B1.1, entitled “Downward Departure

Consideration,” states: “There may be cases in which the offense level determined under this

guideline substantially overstates the seriousness of the offense. In such cases, a downward

departure may be warranted.” Should the Court decide to adopt the loss amount proposed by the

government, Mr. Berman respectfully submits that a downward departure is warranted here.

For years, courts have questioned the “correlation between loss and moral seriousness” at

the heart of U.S.S.G. § 2B1.1(b)(1) and have criticized “the rigidity of the loss amount overriding

the diverse reality of complex financial crimes.” United States v. Johnson, 2018 WL 1997975, at

*4 (E.D.N.Y. Apr. 27, 2018) (documenting critiques of loss enhancement); see also Block, No.

1:16-cr-595, ECF No. 169, at 71 (noting “how broken the guidelines are with respect to being

arbitrarily driven by factors that happen to be quantifiable,” such as “loss amount in financial

cases,” “to the exclusion of considerations that actually go to a defendant’s culpability”); Mark H.

Allenbaugh, Drawn from Nowhere: A Review of the U.S. Sentencing Commission’s White-Collar

Sentencing Guidelines and Loss Data, 26 Fed. Sent’g Rep. 19, 22 (2013) (noting from Sentencing

Commission’s data an “increasing divergence between the average Guidelines minimum and the

average sentence actually imposed as loss amount grows”).

Courts have also noted that the combined effect of the loss enhancement alongside the

various other enhancements in U.S.S.G. § 2B1.1 “represents . . . the kind of ‘piling-on’ of points

for which the guidelines have frequently been criticized.” United States v. Adelson, 441 F. Supp.

2d 506, 510 (S.D.N.Y. 2006) (eschewing sentence recommended by the Guidelines due to an

“absurd” loss amount and relying more heavily on the § 3553(a) factors); accord United States v.

Bikundi, 2022 WL 1451402, at *1 (D.D.C. May 9, 2022) (noting downward departure for fraud

21
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 25 of 38

defendant because “the combination of multiple enhancements under the Guidelines had resulted

in a piling-on effect because some of the enhancements applied addressed very similar and

overlapping considerations” (cleaned up)). For this reason, the Second Circuit has held that

“[w]here the Commission has assigned a rather low base offense level to a crime and then increased

it significantly by a loss enhancement, that combination of circumstances entitles a sentencing

judge to consider a non-Guidelines sentence.” United States v. Algahaim, 842 F.3d 796, 800 (2d

Cir. 2016) (remanding for sentencing court to consider whether non-Guidelines sentence is

appropriate where the loss enhancement tripled the defendant’s base offense level).

Here, Mr. Berman’s base offense level is 7. The government’s proposed loss amount would

add 22 levels, thereby quadrupling Mr. Berman’s offense level. With that enhancement alongside

the others, the Guidelines range for Mr. Berman, a first-time offender in his 70s, would be 168 to

210 months (i.e., 14 to 17.5 years). That sentence is not proportional with Mr. Berman’s base

offense level, and it is discordant with the sentencing factors in 18 U.S.C. § 3553(a). See infra at

23–33. Indeed, the PSR notes that the median sentence for a defendant with the same offense

level and criminal history category is 96 months. PSR ¶ 135.

II. THE STATUTORY SENTENCING FACTORS SUPPORT A SENTENCE OF TIME
SERVED

Any sentence the Court chooses to impose on Mr. Berman must be “sufficient, but not

greater than necessary, to comply with the purposes” of sentencing. 18 U.S.C. § 3553(a). While

the Guidelines are the starting point for any sentence, the Court “may not presume that the

Guidelines range is reasonable but must make an individualized assessment based on the facts

presented.” Gall, 552 U.S. at 39. The Court must consider:

(1) offense and offender characteristics; (2) the need for a sentence to reflect the
basic aims of sentencing, namely, (a) just punishment (retribution), (b) deterrence,
(c) incapacitation, (d) rehabilitation; (3) the sentences legally available; (4) the

22
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 26 of 38

Sentencing Guidelines; (5) Sentencing Commission policy statements; (6) the need
to avoid unwarranted disparities; and (7) the need for restitution.

Rita v. United States, 551 U.S. 338, 347–48 (2007). The sentencing factors support a sentence of

time served.

A. Nature and Circumstances of the Offense Do Not Support a Lengthy Sentence

Crucial to understanding the nature and circumstances of Mr. Berman’s offense is

understanding that DECN was a real company that sold real products, and Mr. Berman put genuine

effort into developing a COVID-19 blood test. What Mr. Berman did was undoubtedly wrong, but

in determining the appropriate sentence for him, it is a mistake to believe that he is a career

fraudster, or that GenViro! was an entirely fictitious product. Neither is true.

1. Mr. Berman put genuine effort into developing a COVID-19 test.

For many years, DECN developed and sold glucose test strips that used impedance

spectroscopy to detect the electrochemical signature of a blood sample. See Ex. B, at 1. DECN’s

test strips were both affordable and reliable, and the company continually innovated. Mr. Berman

sought ways to improve DECN’s test strips so that diabetics could receive more accurate

measurements of their glucose levels. See id. (“Importantly, because the GenUlitmate TBG meter

was able to automatically adjust[] for hematocrit interference, the device was able to provide a

more precise glucose result[] than our earlier products.”). Mr. Berman also hired counsel

experienced with the FDA’s regulatory framework for medical devices to comply with FDA rules.

He consulted closely with his counsel and ran a legitimate and reputable business. See Ex. F, at

3–6 (M. DuVal outlining DECN’s efforts to comply with FDA regulations).

In February 2020, with news about the COVID-19 pandemic growing increasingly dim,

Mr. Berman believed that he could alleviate the burden on the public. He believed that he could

use impedance spectroscopy to invent a test kit—GenViro!—that could detect COVID-19 in blood.

23
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 27 of 38

He consulted with The Bio to determine the viability of GenViro! and put together schematics of

what the product would look like. See ECF No. 179-1; Ex. K, at 91–100 (“GenViro! Development

Summary” from The Bio).

Mr. Berman’s belief was not groundless. Respected authorities in the field have opined

that electrochemical impedance spectroscopy (“EIS”) can be used to detect viruses, including

COVID-19. See Ex. K ¶¶ 3–4 (“Theoretically, an EIS system can detect viruses, including

COVID-19, if the system properly employs three core elements of EIS.”). Although flawed, Mr.

Berman’s GenViro! design complied with several core elements of an EIS system. See id. ¶¶ 6–8.

That is not a coincidence—Mr. Berman put great thought into developing GenViro!. For example,

Mr. Berman’s decision to use photolithography patterned platinum electrodes instead of screen

printed electrodes, which was done in one of the papers he relied on, made the device more

accurate. See id. ¶ 7 (“The inconsistent surface area of screen printed electrodes introduces greater

variability in EIS measurements and could be less precise.”). Mr. Berman’s detection parameters

also reflected genuine thought: the frequencies he chose accounted for background effects that

could make virus detection less accurate. See id. ¶ 8 (“These detection parameters are adequate

because 100 kHz and larger frequencies are used to avoid background effects from liquid-electrode

reactions, and here a liquid electrode reaction would be present.”). In short, Mr. Berman’s

GenViro! design had “a logical electrode design and proper detection parameters for the EIS

detection of a virus in a clean sample.” Id. ¶ 6; see also Ex. M (schematics of the electrode).

Unfortunately, Mr. Berman was ultimately unable to develop a COVID-19 blood test after

running into several difficulties. Mr. Berman thus decided to switch to a saliva test, which his

consultants believed would be a more workable option given the differences between blood

samples and saliva samples. Mr. Berman announced the switch in a press release in July 2020, see

24
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 28 of 38

Ex. J, and, leveraging what he had developed during his work on the blood test, worked doggedly

on a saliva test throughout the rest of 2020 into 2021, developing a full-scale model with several

working components, see Ex. K ¶ 9; Ex. L (presentation outlining saliva test development and

schematics).

2. Mr. Berman consulted with regulatory lawyers to get GenViro! cleared by
the FDA.

While he was developing a workable design for GenViro!, Mr. Berman consulted with the

FDA counsel he had worked with on DECN’s diabetic test strips to get GenViro! cleared by the

FDA. From March through June 2020, Mr. Berman worked with FDA counsel to seek Emergency

Use Authorization from the FDA for a blood-based COVID-19 test. See Ex. E, ¶¶ 3–13; Ex. F, at

6–7. As part of that process, Mr. Berman’s FDA counsel prepared submissions for the FDA

regarding the proposed test and discussed the proposed GenViro! test kit with FDA staff. See Ex.

E, ¶¶ 3–13. At the time, “FDA expectations for these test kits were a continuously moving target

and were particularly difficult for small companies to meet.” Id. ¶ 15. And although Mr. Berman

did not develop a test, his engagement of FDA counsel “to assist him through the EUA process

supports the level of his commitment to understanding the FDA process requirements so that he

could strive to meet them.” Id. (“Although Mr. Berman ultimately did not obtain authorization to

commercialize GenViro! from FDA, what I observed during this period was consistent with a good

faith effort to apply existing impedance technology to develop a test for COVID-19.”).

B. Mr. Berman’s History and Characteristics Do Not Support a Lengthy Sentence

Equally important to this Court’s sentencing determination is the fact that Mr. Berman has

never been convicted of a crime before. He is a first-time offender in his 70s. The attached letters

of support demonstrate that Mr. Berman is an honest broker with a long history of genuine product

development:

25
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 29 of 38

“I have known Keith for over 30 years and have always found him to be a kind, honest,
and highly responsible individual and citizen.” Ex. A, Letter from S. Patel at 1.

“I have known Mr. Berman for the past 18-years. . . . I consider him a friend and a
business partner. Mr. Berman has always been a tough and savvy business man. But
he has also pushed our companies to be innovative and aggressive.” Ex. B, Letter from
D. Kim at 1.

“I found Mr. Berman to be kind, friendly and always professional in our working
relationship. Prompt completion of our work tasks was our mutual goal, and Mr.
Berman proved to be reliable and forthcoming.” Ex. C, Letter from L. Bains at 1.

“I am writing this letter in support of a man who has always dealt straight, honestly and
fairly with me and my staff over a long time and many transactions.” Ex. D, Letter
from A. Rabinowitz at 2.

“Mr. Berman’s engagement of DuVal & Associates to assist him through the EUA
process supports the level of commitment to understanding the FDA process
requirements so that he could strive to meet them.” Ex. E, Affidavit of L. Pritchard
¶ 15.

“Keith Berman is an honest man, a good man.” Ex. F, Affidavit of M. DuVal at 7.

“The Keith that I knew, was kind, considerate, generous, and trustworthy.” Ex. G,
Letter from B. Lyons at 1.

The letters also show that Mr. Berman was always striving to innovate and never willing

to give up easily when he faced a challenge. Bill Lyons, Mr. Berman’s friend of over 30 years, put

it best:

Keith is extremely bright, capable, competent, intuitive, and
insightful. While working together, he always sought to discover a
unique technology, a cutting-edge device or a medical breakthrough.
His intelligence and vision enabled him to see opportunities
invisible to others and his work ethic drove him to convert them into
reality. It is difficult for someone outside of the technological
startup industry to fully appreciate the difficulty of creating
something from nothing and then converting it to success. Very few
attempt that challenge and only a small percentage are able to
actually develop a novel product/device/technology and then launch
it into a virgin market. That was Keith’s driving motivation and
unique skill. We worked together pursuing breakthrough
technologies and were able to discover some. Keith viewed these
pursuits as a mission and never surrendered.

26
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 30 of 38

Ex. G, at 1.

The Court should also consider Mr. Berman’s strong history with his family. Mr. Berman

was an excellent father to his son. See id. (“He is a caring friend, wonderful father to Zac and a

devoted husband to Wendy.”). While there is no question that he made mistakes in his family life

over the years, there is no doubt that Mr. Berman was heavily involved in raising his son,

chaperoning school field trips, coaching his son’s high school baseball team, and supporting his

son as he got his medical degree. Although they have become estranged since his arrest, Mr.

Berman raised his son well, instilling in him a strong work ethic and good values. Mr. Berman’s

son is currently a radiologist and researcher at the University of California, San Diego, and he has

a prolific catalogue of academic publications. See supra at 3.

At bottom, throughout his life, Mr. Berman was devoted to being both a good corporate

executive and a good father. In sentencing Mr. Berman, “the punishment should fit the offender

and not merely the crime.” Williams v. New York, 337 U.S. 241, 247 (1949). Here, neither the

offender nor the offense merit a lengthy sentence of imprisonment.

C. A Long Sentence Is Not Necessary to Afford Adequate Deterrence or Protect
the Public

A lengthy sentence is not necessary to “afford adequate deterrence to criminal conduct” or

“protect the public from further crimes.” 18 U.S.C. § 3553(a)(2)(B)–(C).

1. Specific deterrence is not served by a lengthy sentence because Mr. Berman
is unlikely to repeat his crime.

Given the consequences of his conviction, it is highly unlikely Mr. Berman will ever be

able to engage in this misconduct again. The SEC upheld the trading suspension against DECN. 14

14
The opinion can be found here: https://www.sec.gov/files/litigation/opinions/2024/34-
99439.pdf.
27
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 31 of 38

The company’s reputation, which Mr. Berman spent years building, is tarnished beyond repair. 15

And due to his status as a convicted felon, it is unlikely Mr. Berman will be able to raise money

from investors or issue securities for a public company ever again. See United States v. Johnson,

2018 WL 1997975, at *5 (E.D.N.Y. Apr. 27, 2018) (varying down to a 24-month sentence from a

Guidelines range of 87-108 months in part because the court believed “it is highly unlikely that

[the defendant] will work again as an FX trader, or anything similar”); Block, No. 1:16-cr-595,

ECF No. 169, at 70 (“It is also true that the fact of a felony conviction and the presumed inability

of the defendant to maintain his profession is significant punishment in itself”). For instance, as a

felon convicted of securities fraud, Mr. Berman is disqualified from participating in the securities

industry. See 15 U.S.C. § 78c(a)(39); 17 CFR § 227.503(a)(1). He also faces countless other

collateral consequences as a result of his conviction. See United States v. Nesbeth, 188 F. Supp.

3d 179, 184 (E.D.N.Y. 2016) (noting that “there are nationwide nearly 50,000 federal and state

statutes and regulations that impose penalties, disabilities, or disadvantages on convicted felons”);

see also Ex. D, at 1 (A. Rabinowitz: “Due to his guilty plea and the nature of the charges it is

practically impossible for Keith to again be in a situation where he could ever duplicate the actions

preceding his guilty plea.”).

Mr. Berman has also suffered the consequences of his actions in his personal life. Mr.

Berman’s partner has not spoken with him since his arrest in this case, and neither has his son, who

had a close relationship with Mr. Berman his whole life. Mr. Berman has also lost friendships with

15
See, e.g., Department of Justice Office of Public Affairs, Biotech CEO Pleads Guilty to COVID-
19 Securities Fraud Scheme, https://www.justice.gov/opa/pr/biotech-ceo-pleads-guilty-covid-19-
securities-fraud-scheme (Dec. 8, 2024); Mansur Shaheen, Man Who Made Theranos-Like Claims
About a COVID Blood Test Pleads Guilty, https://www.msn.com/en-us/money/companies/man-
who-made-theranos-like-claims-about-a-covid-blood-test-pleads-guilty/ar-AA1lGQv8 (Dec. 18,
2023).
28
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 32 of 38

countless friends he has made during his 70 years of life. Mr. Berman will also face considerable

difficulty obtaining a job given his age, his medical conditions, and his felony conviction.

Mr. Berman’s decision to violate the terms of his pre-trial release does not undercut this

calculus. The Court’s decision to revoke pre-trial release, frankly, gave Mr. Berman the wakeup

call he needed. Mr. Berman has accrued a spotless disciplinary record. See PSR ¶ 14. And,

importantly, Mr. Berman is unlikely to repeat the same violation—that is, sell an asset valued at

more than $10,000 without the Court’s permission. Mr. Berman has no money, and as discussed

above, his reputation, along with his business’s reputation, has been obliterated. He is now a

convicted felon, and it is unlikely he will be able to raise money like he did before he was

convicted.

Mr. Berman is also unlikely to reoffend given his background. He has no criminal history

points, and the Sentencing Commission has found that “offenders with zero criminal history points

have considerably lower recidivism rates than other offenders, including offenders with one

criminal history point.” Amendment 821 to the U.S. Sentencing Guidelines, Reason for

Amendment (effective Nov. 1, 2023). So the need to impose a lengthy criminal sentence against

Mr. Berman is minimal here, since he is unlikely to reoffend in the first place.

2. General deterrence of crime does not support a lengthy sentence.

A lengthy federal sentence does not advance general deterrence of crime either. The

Department of Justice itself has said that “[i]ncreasing the severity of punishment does little to

deter crime.” U.S. Dep’t of Justice, National Institute of Justice, Five Things About Deterrence,

(June 5, 2016), https://nij.ojp.gov/topics/articles/five-things-about-deterrence. Courts and

commentators agree—there is “considerable evidence that even relatively short sentences can have

a strong deterrent effect on prospective ‘white collar’ offenders.” Adelson, 441 F. Supp. 2d at 514

(citing academic articles and Sentencing Commission data); Block, No. 1:16-cr-595, ECF No. 169,
29
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 33 of 38

at 71 (noting in securities fraud case that “with respect to crimes like this people don’t think they’re

going to get caught, and a sentence of seven years versus two years versus three years does not

make a huge difference in general deterrence.”). Accordingly, this Court should not impose a

lengthy sentence in the name of deterring crime. Not only is it no more effective than a shorter

sentence, “[t]here is no justice in imposing a sentence merely to make an example out of a

defendant.” United States v. Musgrave, 647 F. App’x 529, 533 (6th Cir. 2016).

D. The Seriousness of the Offense, Respect for the Law, and Just Punishment Do
Not Support a Lengthy Sentence

Section 3553(a)(2)’s goals for a sentence “to reflect the seriousness of the offense,” “to

promote respect for the law” and “to provide just punishment” are not achieved by a lengthy

sentence of incarceration here.

Mr. Berman’s crimes were serious, but a sentence of 168–210 months’ imprisonment

overstates the moral seriousness of his offenses. Mr. Berman’s Guidelines range is driven in large

part by a loss amount figure that the government has failed to support. See supra at 6–12. And

even if the Court disagreed with that, it is undisputed that the loss enhancement by itself accounts

for well over 50% of Mr. Berman’s adjusted offense level. Courts have repeatedly criticized the

lack of correlation between moral culpability and total loss in financial crimes. See supra at 21–

22. That is particularly true in a case like this one involving penny stocks. The evidence shows

that this is a market that is typically occupied with speculation and outright gambling. See Ex. O,

at 57:23–58:1 (“The penny stock market, based on your experience, is there a fair amount

of . . . speculative trading? Absolutely.”); id. at 79:5–12 (“[M]y lived experience in that period of

time is that people were looking for potential opportunities to profit off of the onset of the COVID

pandemic. . . . My experience with traders and speculators in this section of the market is they

might look at a stock chart and nothing else and make a decision.”); Ex. Q, at 2–13 (discussing

30
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 34 of 38

trading strategies focused solely on DECN’s price chart). That is not to say that Mr. Berman’s

conduct was okay—it was not—but it is clear that Mr. Berman’s conduct was not so heinous that

it rises up to some of most odious forms of securities fraud, wire fraud, or obstruction of justice

possible. Yet a sentence of 168–210 months says precisely that.

Also, such a lengthy sentence does not promote respect for the law or promote just

punishment. As explained above, a shorter sentence in a case like this is just as likely as a longer

sentence to deter criminal behavior. See supra at 29–30. And the collateral consequences of a

federal conviction in this case—including incarceration with significant medical issues, public

vilification, inability to get a job, loss of business, loss of rights, and loss of family—alongside a

shorter sentence provide sufficient just punishment for this offense to achieve the retributive goals

of sentencing. See supra at 27–29.

E. The Need to Avoid Unwarranted Sentencing Disparities Supports a Shorter
Sentence

The “need to avoid unwarranted sentence disparities among defendants with similar

records who have been found guilty of similar conduct” supports a sentence of time served in this

case. From 2015 to 2021, the median sentence for a defendant in this District (1) whose primary

Guideline was U.S.S.G. § 2B1.1, (2) had no criminal history, and (3) was in Zone D, was 20

months’ imprisonment. See United States Sentencing Commission, Interactive Data Analyzer,

https://ida.ussc.gov/analytics/saw.dll?Dashboard (last visited Apr. 4, 2024). Nationally, the

median sentence was 26 months. Id.

Even if this Court were to disagree with Mr. Berman and adopt the enhancements argued

by the government, a sentence significantly lower than 168–210 months’ imprisonment is

warranted. Of defendants who had a total offense level of 35 and had a criminal history category

of I in the last five years, 58% received below Guidelines sentences. United States Sentencing

31
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 35 of 38

Commission, Judiciary Sentencing Information, https://jsin.ussc.gov/analytics/saw.dll?Dashboard

(last visited April 4, 2024). The median length of imprisonment for those defendants was 96

months. Id. But given the sheer number of duplicative enhancements that apply to cases driven

by U.S.S.G. § 2B1.1, and individual defendant-specific factors, courts frequently vary downward

even lower. Below are just a few examples:

United States v. Taylor, 1:19-cr-850 (S.D.N.Y. Mar. 26, 2021), ECF No. 157
(sentencing COO of publicly traded biopharmaceutical company to 12 months’
imprisonment despite offense level of 39 and criminal history category of I,
because “a guidelines range of 262 to 327 months in prison” was “[b]izarre,
barbaric, absurd,” and “just one more reflection of how misguided the
guidelines are in this area”).

United States v. Shor, 1:18-cr-328 (S.D.N.Y. Nov. 11, 2019), ECF Nos. 297,
301 (sentencing trader to 40 months’ imprisonment for overinflating assets
despite Guidelines range of 168–210 months’ imprisonment).

United States v. Rowan, 1:16-cr-10343 (D. Mass. Jan. 23, 2020), ECF No. 1167
(sentencing racketeering conspiracy defendant to 27 months’ imprisonment
despite having Guidelines range of 135–168 months).

United States v. Milton, 1:21-cr-478 (S.D.N.Y. Jan. 17, 2024), ECF Nos. 315,
327 (sentencing defendant to 48 months’ imprisonment despite PSR claiming a
total offense level of 37 and recommending a 132-month sentence).

United States v. Musgrave, 647 F. App’x 529, 538 (6th Cir. 2016) (affirming
downward variance for defendant with offense level of 25 and a $1.7 million
loss to sentence of one day of imprisonment “because the loss Guidelines were
not developed using an empirical approach based on data about past sentencing
practices” and thus “is particularly appropriate for variances”).

United States v. Johnson, 2018 WL 1997975, at *3–4 (E.D.N.Y. April 27, 2018)
(varying downward to 24 months’ imprisonment despite $3.1 million loss from
front-running trades and Guidelines range of 87 to 108 months’ imprisonment
because “the Sentencing Commission’s loss-enhancement numbers do not
result from any reasoned determination of how the punishment can best fit the
crime”).

United States v. Adelson, 441 F. Supp. 2d 506, 512 (S.D.N.Y. 2006) (sentencing
defendant to 42 months’ imprisonment despite loss of $50 million and
Guidelines range of 85 years’ imprisonment because the Guidelines placed an
“inordinate emphasis” on loss).

32
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 36 of 38

These statistics and cases make one thing abundantly clear: a Guidelines sentence is not

appropriate in this case. Defendants whose sentences are driven by U.S.S.G. § 2B1.1 repeatedly

receive sentences significantly lower than their Guidelines range, particularly when the loss

amount is so high. That should be no different here. Given the case-specific circumstances

articulated above, and the time Mr. Berman has already served, his sentence should be time served.

CONCLUSION

For most of his life, Keith Berman strived to help patients get better medical care. He was

a good businessman and a loving father. He had no criminal record. When the COVID-19

pandemic hit, he believed he could offer the world a test kit that would give people the chance to

return to some semblance of normalcy. But he made mistakes. He committed securities fraud,

wire fraud, and obstructed justice. When it came time to face the music, he admitted to his crimes

and pled guilty. His reputation is now in tatters. His business is destroyed. His relationship with

his family is strained. And at 70, with significant medical issues and a felony conviction, his

chances of living his life like before are nonexistent. As this Court prepares to sentence Mr.

Berman, it must consider this whole picture and fashion a sentence that is “sufficient, but not

greater than necessary,” to serve the purposes of sentencing. 18 U.S.C. § 3553(a). Mr. Berman

respectfully submits that, given the amount of time he has already served, the appropriate sentence

is time served. Such a sentence will achieve the retributive and deterrent goals of sentencing and

ensure that resources are not wasted on incarcerating someone with no real risk of recidivism.

33
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 37 of 38

DATED: April 6, 2024 Respectfully submitted,

/s/Kevin B. Collins
Kevin B. Collins (D.C. Bar No. 445305)
Nicholas J. Xenakis (D.C. Bar No. 90001123)
Jose J. Ramos (pro hac vice)
Lori Taubman (D.C. Bar No. 1673026)
Jonah T. Panikar (D.C. Bar No. 90006218)
José F. Girón (D.C. Bar No. 90020611)
Brandon Howell (D.C. Bar No. 1671396)
COVINGTON & BURLING LLP
One CityCenter
850 Tenth Street, NW
Washington, D.C. 20001
(202) 662-5598

Michelle Peterson (D.C. Bar No. 438930)
Assistant Federal Public Defender
For the District of Columbia
625 Indiana Avenue, N.W.
Washington, DC 20004

Counsel for Keith Berman

34
Case 1:20-cr-00278-TNM Document 195 Filed 04/06/24 Page 38 of 38

CERTIFICATE OF SERVICE

I hereby certify that I caused copies of the foregoing to be transmitted to counsel registered

to receive electronic service.

/s/ Kevin B. Collins
Kevin B. Collins (D.C. Bar No. 445305)

Counsel for Keith Berman

File and source

File: 195.pdf
Size: 312,779 bytes
SHA-256: cbf447737bdcea1fc865569c2ab4f5eca24db17be751fbaa8a92cb4ae9b46085
Our copy: 195.pdf
Original: No public link identified.