A federal grand jury recently indicted the CEO of a California-based medical device company on charges of committing security fraud and making false statements, the U.S. Department of Justice said in a news release.
The indictment alleges that Decision Diagnostics Inc. (DECN) CEO Keith Berman, 67, schemed to defraud investors by claiming that his company had developed a 15-second test to detect COVID-19 in a finger-prick sample of blood.
In truth, Berman knew his test was only an idea and not a valid method of accurately detecting COVID-19, much less a product ready for manufacture and sale, according to the news release. The indictment alleges that Berman and DECN were in shaky financial condition in the lead-up to the pandemic, and Berman wrote in internal emails that he needed a “new story” to “raise millions.”
The indictment alleges that Berman told investors that the Food and Drug Administration was on the verge of approving his company’s request for emergency use authorization of its new COVID-19 test. In truth, Berman knew the company lacked the necessary resources to conduct FDA-required clinical testing to complete the application process, but he hid those facts from investors, according to the news release.
In an effort to win approval of his company’s COVID-19 test without the required testing, Berman hired a political consultant to lobby members of Congress, according to the news release. He allegedly told lawmakers that the FDA had “mothballed” the company’s submission, and it remained “stuck in limbo” at about the same time Berman was telling investors the test was on the verge of approval.
The indictment said Berman used an alias, “plutonium implosion,” to repeat false statements to investors on Internet message boards and lull suspicious investors into inaction by refuting allegations of fraud and threatening potential whistleblowers with civil or criminal sanctions.
The indictment alleged that Berman made false statements in sworn testimony to the SEC, in which he denied posting on the message board.
An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.