Keith Berman, Securities Fraud, California 2024

Biotech CEO Keith Berman, 70, of Westlake Village, California, was sentenced to seven years in prison for a securities fraud scheme that resulted in approximately $28 million in investor losses.

The scheme involved Decision Diagnostics Corp., a publicly traded medical device company, where Berman was the CEO and sole director. 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 sample of blood when, in reality, no such test existed.

Berman also falsely told investors that the Food and Drug Administration (FDA) was on the verge of approving Decision Diagnostics’ request for emergency use authorization of its purported COVID-19 test. 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.

“At 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,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri.

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.

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.

Berman pleaded guilty on December 7, 2023 to securities fraud, wire fraud, and obstruction of an official proceeding. The USPIS and the FBI investigated the case, and Trial Attorneys Christopher Fenton, Kate T. McCarthy, and Matthew Reilly of the Criminal Division’s Fraud Section prosecuted the case.

Source: https://www.justice.gov/archives/opa/pr/biotech-ceo-sentenced-28m-covid-19-securities-fraud-scheme-and-obstruction-related