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Officials stated that the CEO of a California biotechnology company was sentenced Friday to seven years in prison for a securities fraud scheme.<\/p>\nOfficials stated that the CEO of a California biotechnology company was sentenced Friday to seven years in prison for a securities fraud scheme.<\/p>\n
The scheme resulted in approximately $28 million in investor losses and obstruction of a related U.S. Securities and Exchange Commission (SEC) investigation.<\/p>\n
According to court documents, Keith Berman, 70, of Westlake Village, California, was the CEO and sole director of Decision Diagnostics Corp., a publicly traded medical device company.<\/p>\n
From February through December 2020, Berman engaged in a scheme to defraud investors by falsely claiming that Decision Diagnostics had developed a 15-second test to detect COVID-19 in a finger prick blood sample when, in reality, no such test existed, according to authorities.<\/p>\n
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Berman also falsely told investors that the Food and Drug Administration (FDA) was about to approve Decision Diagnostics\u2019 request for emergency use authorization of its purported COVID-19 test.<\/p>\n
In reality, 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.<\/p>\n
\u201cAt the height of the COVID-19 pandemic, Keith Berman gave people false hope that his biotech company had developed a rapid blood test to detect COVID-19. But there was no such test. Berman defrauded investors to profit from the pandemic,\u201d said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department\u2019s Criminal Division. \u201cToday\u2019s sentence sends a message that those who attempt to capitalize on fear and desperation to cheat unsuspecting Americans in times of national emergency will be held accountable.\u201d<\/p>\n
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As part of the 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.<\/p>\n
Berman also obstructed an 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.<\/p>\n
\u201cThe defendant, Keith Berman, used the chaos of COVID-19 to not only orchestrate a fraudulent scheme that preyed on investors\u2019 uncertainties, but he also ensnared them in a deceitful web of lies with promises of prosperity, then retaliated against his victims when confronted with his bogus claims, demonstrating his callous disregard for others facing financial ruin at his hands,\u201d said Inspector in Charge Eric Shen of the U.S. Postal Inspection Service\u2019s (USPIS) Criminal Investigations Group \u201cThe U.S. Postal Inspection Service, along with our partners, will continue to bring these predatory criminals to justice.\u201d<\/p>\n
\u201cKeith Berman not only misrepresented himself and lied about a phony COVID-19 diagnostic test to entice unsuspecting investors, but he also engaged in threats and obstructed a federal investigation,\u201d said Assistant Director Michael D. Nordwall of the FBI\u2019s Criminal Investigative Division. \u201cThis case demonstrates the FBI\u2019s continued commitment to working with our partners to combat fraud and hold perpetrators accountable.\u201d<\/p>\n
Berman pleaded guilty on Dec. 7, 2023, to securities fraud, wire fraud, and obstruction of an official proceeding.<\/p>\n
USPIS and the FBI investigated the case.<\/p>\n
Trial Attorneys Christopher Fenton, Kate T. McCarthy, and Matthew Reilly of the Criminal Division\u2019s Fraud Section prosecuted the case.<\/p>\n