Biotech Exec Gets 7 Years in Prison for False Claims About Rapid Covid-19 Test

The former CEO of a biotechnology company who, at the start of the pandemic, falsely claimed to have invented a blood test capable of detecting Covid-19 in 15 seconds, was sentenced Friday to seven years in prison for fraud in securities. » prosecutors said.

From February 2020 to December 2020, former executive Keith Berman, 70, of Westlake Village, California, engaged in a scheme to defraud people into investing in his company, Decision Diagnostics Corporation, in claiming the test could detect Covid using a finger. a prick blood sample, prosecutors said.

In March and April 2020, Mr. Berman issued 12 “false and misleading” press releases describing the rapid Covid test, which his company called GenViro, prosecutors wrote. Decision Diagnostics’ stock price jumped more than 1,500 percent during the period, prosecutors said.

In reality, prosecutors said, Mr. Berman had “privately confided to a friend that the test could not actually detect Covid-19.”

Prosecutors accused Mr. Berman, the sole director of the publicly traded medical device company, of capitalizing on people’s fears about the pandemic in an effort to resurrect the company’s fortunes.

Mr. Berman’s scheme resulted in losses of about $28 million for investors, prosecutors said. Mr. Berman was indicted in December 2020 and pleaded guilty in December 2023 to securities fraud, wire fraud and obstruction of an official proceeding.

By early 2020, Decision Diagnostics was in perilous financial condition because, among other reasons, Mr. Berman had spent hundreds of thousands of dollars of company funds to pursue an online relationship with a webcam model, they wrote prosecutors in court documents.

Mr. Berman falsely represented to investors that the Food and Drug Administration was close to approving Decision Diagnostics’ application for emergency use authorization for the Covid test, prosecutors said. But Mr. Berman knew his company was unable to meet the FDA’s clinical testing requirements, prosecutors wrote.

After the Securities and Exchange Commission questioned Mr. Berman’s claims about the test, prosecutors wrote in court papers that he “launched a relentless campaign of lies aimed at ruining the lives and careers of staff of the SEC by falsely accusing them of having committed serious crimes.

Federal prosecutors had asked that he be sentenced to 10 years in prison, calling him a “cruel and callous criminal” who “gave people false hope” that his test was a reality.

“Keith Berman not only misrepresented and lied about a fake COVID-19 diagnostic test to lure unsuspecting investors, but he also made threats and obstructed a federal investigation,” the statement said. Michael D. Nordwall, deputy director of the FBI’s Criminal Investigation Division. in a report.

Mr. Berman’s lawyer, Kevin B. Collins, wrote in court papers that his client had been in prison since March 2023 and asked that he be sentenced to time served. Mr. Collins wrote that Mr. Berman made “genuine efforts” to perform a rapid Covid-19 blood test.

“When the Covid-19 pandemic hit, he thought he could offer the world a testing kit that would give people the chance to return to some semblance of normality,” Mr. Collins wrote. “But he made mistakes.”

For 20 years, Mr. Berman sold devices that helped people with diabetes monitor their blood sugar levels, using a type of technology that could detect the electrochemical signature of a blood sample, Mr. Collins wrote.

In late February 2020, as demand for Covid tests exploded, Mr. Berman believed he could “harness his knowledge of this technology to invent a device capable of detecting Covid-19 in blood,” Mr. Collins wrote.

Mr. Berman consulted with experts in the United States and South Korea to “develop the design specifications, and he hired an experienced FDA attorney to try to obtain the required approvals,” his lawyer wrote.

But at the time, Mr. Collins wrote: “Mr. Berman needed money, so he issued misrepresented press releases about the status of his project in order to raise the funds necessary to bring it to fruition.” well and enrich themselves personally from the success of the company.

Mr. Collins noted that Mr. Berman admitted his crimes by pleading guilty.

“His reputation is now in tatters,” Mr. Collins wrote. “His business is destroyed. His relations with his family are strained. And at 70 years old, with significant medical issues and a felony conviction, his chances of living his life as before are nonexistent.