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A federal grand jury within the District of Maryland returned an indictment that was unsealed immediately charging two males for his or her roles in schemes to defraud buyers in CytoDyn Inc., a publicly traded biotechnology firm (OTCQB: CYDY) primarily based in Vancouver, Washington.
In accordance with courtroom paperwork, Nader Pourhassan, 59, of Lake Oswego, Oregon, and Kazem Kazempour, 69, of Potomac, Maryland, allegedly engaged in a conspiracy to defraud buyers by way of false and deceptive representations and materials omissions referring to CytoDyn’s growth of leronlimab, a monoclonal antibody investigational drug also called PRO 140, as a possible remedy for human immunodeficiency virus (HIV). Pourhassan and Kazempour allegedly deceived buyers concerning the timeline and standing of CytoDyn’s regulatory submissions to the U.S. Meals and Drug Administration (FDA) to artificially inflate and preserve the value of CytoDyn’s inventory and entice new buyers, and for his or her private profit, together with by promoting their private shares of CytoDyn inventory.
Pourhassan was CytoDyn’s president and CEO on the time of the alleged fraud. Kazempour is the co-founder, president, and CEO of Amarex Medical Analysis LLC (Amarex), a personal firm with places of work in Germantown, Maryland, that managed CytoDyn’s scientific trials, and was CytoDyn’s regulatory agent in interactions with the FDA. Kazempour additionally served on CytoDyn’s Disclosure Committee, which was chargeable for reviewing and approving CytoDyn’s periodic filings with the U.S. Securities and Change Fee.
“The Division of Justice is dedicated to defending the investing public from criminals who would exploit public well being crises for private revenue,” stated Assistant Legal professional Basic Kenneth A. Well mannered, Jr. of the Justice Division’s Prison Division. “These costs additionally verify the division’s dedication, along with our legislation enforcement companions, to carry corrupt C-Suite executives who abuse their positions and interact in securities fraud accountable for his or her actions.”
“The indictment alleges that these defendants conspired to defraud buyers so as to line their very own pockets,” stated U.S. Legal professional Erek L. Barron for the District of Maryland. “Buyers should have the ability to depend on the statements of biotech firms about their merchandise. Executives who knowingly mislead buyers should be held accountable.”
The indictment alleges that Pourhassan and Kazempour made and triggered CytoDyn to make materially false and deceptive representations concerning the timelines by which CytoDyn and Amarex would full and submit CytoDyn’s biologics license utility (BLA) for leronlimab’s remedy of HIV to the FDA. In April 2020, after CytoDyn and Amarex repeatedly missed publicized timelines, Pourhassan allegedly directed Kazempour and Amarex to submit the BLA – even when it was incomplete – in order that Pourhassan and CytoDyn might announce to buyers that the BLA had been submitted. Pourhassan and Kazempour allegedly knew that the FDA would refuse to evaluate an incomplete BLA.
After Kazempour and Amarex allegedly submitted the unfinished BLA at Pourhassan’s course, Pourhassan and CytoDyn misrepresented in a press launch {that a} “full” BLA had been submitted to the FDA when, in fact and actually, it had not. Pourhassan then allegedly bought tens of millions of {dollars}’ value of CytoDyn inventory primarily based on materials personal data, together with details about the truth that the BLA was, in fact and actually, incomplete when submitted.
“Monetary crimes like securities fraud will not be violent, however they definitely usually are not victimless. The 2 people charged immediately capitalized on the hopes of buyers and the general public in supporting new therapies for illnesses that have an effect on individuals and their households,” stated Particular Agent in Cost Thomas J. Sobocinski of the FBI Baltimore Area Workplace. “This indictment sends a message to all refined white-collar criminals that nobody is past the attain of the FBI and our legislation enforcement companions and we don’t tolerate the grasping intentions of these in such trusted positions.”
“The conduct alleged in these costs erodes public belief within the security and effectiveness of medical merchandise, together with medicine,” stated Assistant Commissioner Catherine A. Hermsen of the FDA’s Workplace of Prison Investigations (OCI). “The FDA want to lengthen our because of our federal legislation enforcement companions for sending a powerful message to biotechnology executives and others that a majority of these actions is not going to be tolerated.”
The indictment additionally alleges that Pourhassan made, and triggered CytoDyn to make, materially false and deceptive representations about CytoDyn’s investigation and growth of leronlimab as a possible remedy for COVID-19, together with the outcomes and significance of scientific trials and the standing of CytoDyn’s regulatory submissions to the FDA. Pourhassan allegedly knew that, in fact and actually, leronlimab’s scientific research failed to realize the outcomes mandatory to acquire any type of FDA approval to be used as a remedy for COVID-19 and the outcomes CytoDyn publicly touted had been neither statistically vital nor scientifically sound.
“All through historical past, Postal Inspectors have investigated many funding schemes and the one factor that at all times rings true, the place there are massive sums of cash to be made, scammers are at all times lurking,” stated Inspector in Cost Eric Shen of the U.S. Postal Inspection Service (USPIS) Prison Investigations Group. “On this case, these people took benefit of the dream of a potential new remedy for HIV and exploited buyers, whereas dashing the hopes of many ready for a remedy. Postal Inspectors and their legislation enforcement companions will work tirelessly to deliver to justice those that break regulatory and funding requirements, protecting the investing panorama secure and freed from crime for the American public.”
Pourhassan and Kazempour are every charged with one rely of conspiracy to commit securities fraud and wire fraud, three counts of securities fraud, and two counts of wire fraud associated to the HIV BLA scheme. Pourhassan is individually charged with an extra rely of securities fraud, an extra rely of wire fraud associated to the COVID-19 scheme, and three counts of insider buying and selling. Kazempour is individually charged with one rely of constructing false statements to federal legislation enforcement brokers. Pourhassan will make his preliminary courtroom look later immediately within the District of Oregon. Kazempour will make his preliminary courtroom look later immediately within the District of Columbia. If convicted, Pourhassan and Kazempour every face a most penalty of 20 years in jail on every securities fraud and wire fraud rely, and 5 years in jail on the conspiracy rely. Kazempour additionally faces a most penalty of 5 years in jail on the false statements rely. A federal district courtroom decide will decide any sentence after contemplating the U.S. Sentencing Tips and different statutory elements.
The FBI Baltimore Area Workplace, FDA-OCI, and USPIS are investigating the case.
Trial Attorneys Christopher Fenton and Joshua DeBold and Assistant Chief Michael O’Neill of the Prison Division’s Fraud Part and Assistant U.S. Attorneys Aaron S.J. Zelinsky and Leo Smart for the District of Maryland are prosecuting the case.
For those who imagine you’re a sufferer on this case, please contact the Fraud Part’s Sufferer Witness Unit toll-free at (888) 549-3945 or by e mail at victimassistance.fraud@usdoj.gov. Victims can discover case updates and extra data at: https://www.justice.gov/criminal-vns/case/CytoDyn-Inc.
An indictment is merely an allegation. All defendants are presumed harmless till confirmed responsible past an inexpensive doubt in a courtroom of legislation.
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