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Baltimore, Maryland – A federal grand jury has returned an indictment charging Nader Pourhassan, age 59 of Lake Oswego, Oregon, and Kazem Kazempour, age 69, of Potomac Maryland, for his or her roles in schemes to defraud buyers in CytoDyn Inc., a publicly traded biotechnology firm based mostly in Vancouver, Washington. Pourhassan was CytoDyn’s president and CEO on the time of the alleged fraud. Kazempour is the co-founder, president, and CEP of Amarex Scientific Analysis LLC (Amarex), a personal firm with places of work in Germantown, Maryland, that managed CytoDyn’s scientific trials. The indictment was returned on December 15, 2022, and unsealed immediately upon the arrests of the defendants.
The indictment was introduced by United States Legal professional for the District of Maryland Erek L. Barron; Assistant Legal professional Normal Kenneth A. Well mannered of the Justice Division’s Felony Division; Particular Agent in Cost Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Discipline Workplace; Assistant Commissioner Catherine A. Hermsen of the FDA’s Workplace of Felony Investigations (OCI); Postal Inspector in Cost Damon E. Wooden of the U.S. Postal Inspection Service – Washington Division.
“The indictment alleges that these defendants conspired to defraud buyers with the intention to line their very own pockets,” stated U.S. Legal professional Erek L. Barron for the District of Maryland. “Traders 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 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 Normal Kenneth A. Well mannered, Jr. of the Justice Division’s Felony Division. “These fees additionally affirm the division’s dedication, along with our regulation enforcement companions, to carry corrupt C-Suite executives who abuse their positions and have interaction in securities fraud accountable for his or her actions.”
In line with the 14-count indictment, the defendants engaged in conspiracy and schemes to defraud buyers by false and deceptive representations and materials omissions regarding CytoDyn’s improvement of leronlimab, a monoclonal antibody investigational drug also referred to as PRO 140, as a possible therapy 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 worth of CytoDyn’s inventory and appeal to new buyers, and for his or her private profit, together with by promoting their private shares of CytoDyn inventory. Amarex served as CytoDyn’s regulatory agent in interactions with the FDA and Kazempour additionally served on CytoDyn’s Disclosure Committee, which was accountable for reviewing and approving CytoDyn’s periodic filings with the U.S. Securities and Change Fee.
The indictment additional alleges that Pourhassan and Kazempour made and brought on CytoDyn to make materially false and deceptive representations concerning the timelines by which CytoDyn and Amarex would full and submit CytoDyn’s biologics license software (BLA) for 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 overview an incomplete BLA.
After Kazempour and Amarex allegedly submitted the unfinished BLA at Pourhassan’s path, Pourhassan and CytoDyn misrepresented in a press launch {that a} “full” BLA had been submitted to the FDA when, in reality and in reality, it had not. Pourhassan then allegedly bought hundreds of thousands of {dollars}’ value of CytoDyn inventory based mostly on materials private info, together with details about the truth that the BLA was, in reality and in reality, incomplete when submitted.
“Monetary crimes like securities fraud might not be violent, however they actually aren’t victimless. The 2 people charged immediately capitalized on the hopes of buyers and the general public in supporting new remedies for illnesses that have an effect on folks and their households,” stated Particular Agent in Cost Thomas J. Sobocinski of the FBI Baltimore Discipline Workplace. “This indictment sends a message to all refined white-collar criminals that nobody is past the attain of the FBI and our regulation enforcement companions and we don’t tolerate the grasping intentions of these in such trusted positions.”
“The conduct alleged in these fees erodes public belief within the security and effectiveness of medical merchandise, together with medication,” stated Assistant Commissioner Catherine A. Hermsen of the FDA’s Workplace of Felony Investigations (OCI). “The FDA wish to prolong our because of our federal regulation enforcement companions for sending a powerful message to biotechnology executives and others that a lot of these actions is not going to be tolerated.”
The indictment additionally alleges that Pourhassan made, and brought on CytoDyn to make, materially false and deceptive representations about CytoDyn’s investigation and improvement of leronlimab as a possible therapy 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 reality and in reality, leronlimab’s scientific research failed to attain the outcomes vital to acquire any type of FDA approval to be used as a therapy 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 all the time rings true, the place there are massive sums of cash to be made, scammers are all the time lurking,” stated Inspector in Cost Eric Shen of the U.S. Postal Inspection Service (USPIS) Felony Investigations Group. “On this case, these people took benefit of the dream of a doable new therapy for HIV and exploited buyers, whereas dashing the hopes of many ready for a remedy. Postal Inspectors and their regulation enforcement companions will work tirelessly to convey to justice those that break regulatory and funding requirements, conserving the investing panorama protected and freed from crime for the American public.”
Pourhassan and Kazempour are every charged with one depend 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 a further depend of securities fraud, a further depend of wire fraud associated to the COVID-19 scheme, and three counts of insider buying and selling. Kazempour is individually charged with one depend of creating false statements to federal regulation enforcement brokers. Pourhassan and Kazempour made their preliminary courtroom look immediately within the District of Oregon and the District of Columbia, respectively.
If convicted, Pourhassan and Kazempour every face a most penalty of 20 years in jail on every securities fraud and wire fraud depend, and 5 years in jail on the conspiracy depend. Kazempour additionally faces a most penalty of 5 years in jail on the false assertion depend. A federal district courtroom choose will decide any sentence after contemplating the U.S. Sentencing Tips and different statutory elements.
In case you 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 info at: https://www.justice.gov/criminal-vns/case/CytoDyn-Inc.
An indictment is just not a discovering of guilt. A person charged by indictment is presumed harmless except and till confirmed responsible at some later felony proceedings.
United States Legal professional Erek L. Barron counseled the FBI, FDA-CID, and USPIS for his or her work within the investigation. Mr. Barron thanked Assistant U.S. Attorneys Aaron S.J. Zelinsky and Leo J. Sensible, and Trial Attorneys Christopher Fenton and Joshua DeBold and Assistant Chief Michael O’Neill of the Felony Division’s Fraud Part, who’re prosecuting the case.
For extra info on the Maryland U.S. Legal professional’s Workplace, its priorities, and sources out there to assist the neighborhood, please go to www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.
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