Biotech CEO’s Securities Scheme Unravels

Biotech CEO’s Securities Scheme Unravels

NEWARK, N.J. – Michael M. Cohen, 49, of West Orange, New Jersey, has been caught in his own web of deceit. The president and CEO of Proteonomix Inc., a Paramus-based biotechnology company, pleaded guilty to certifying false statements with the U.S. Securities and Exchange Commission (SEC).

Cohen’s scheme involved concealing his ties to his father-in-law’s business dealings, which were disguised as legitimate transactions. The SEC requires companies to disclose ‘related-party transactions’ involving immediate family members with a direct or indirect material interest. Cohen knowingly failed to disclose that a $2 million debt conversion into Proteonomix stock was a related-party transaction.

Proteonomix performed stem cell research and developed cosmeceutical products. Cohen’s father-in-law was the president of several companies, including Nancyco of NY Inc., Joe & Sam of New York Inc., Mollyco of NY Inc., and JSMNM Inc. These companies purportedly performed work for Proteonomix in exchange for shares.

Cohen, as the president, CEO, and chief financial officer for Proteonomix, was required to accurately disclose the company’s financial information to the investing public. His failure to do so has put him in a precarious position. The false statements count to which Cohen pleaded guilty carries a maximum potential penalty of 10 years in prison and a $1 million fine.

Sentencing is scheduled for May 27, 2015. The SEC has also filed a civil complaint against Cohen. The investigation was led by the FBI and the SEC’s Division of Enforcement.

Cohen’s defense counsel, Jacob Frenkel Esq. of Baltimore, Maryland, will likely face an uphill battle in convincing the court to go easy on his client. The government is represented by Assistant U.S. Attorney Lakshmi Srinivasan Herman of the U.S. Attorney’s Economic Crimes Unit in Newark.

Cohen’s guilty plea is a stark reminder of the importance of transparency in business dealings. The SEC’s regulations are in place to protect investors and ensure that companies operate with integrity. Cohen’s actions have compromised the trust of the investing public and will likely have far-reaching consequences for his company and his personal life.

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