A federal grand jury has indicted two biotech chief executive officers on charges they defrauded investors in the company CytoDyn, according to InsuranceNewsNet.
59-year-old Nader Pourhassan of Lake Oswego, Oregon and 69-year-old Kazem Kazempour of Potomac, Maryland, are each charged with one count of conspiracy to commit securities fraud and wire fraud, three counts of securities fraud and two counts of wire fraud.
According to to the indictment, the two conspired to defraud investors through false and misleading statements related to CytoDyn’s development of a leronlimab, an antibody investigational drug regarded as a potential treatment for HIV.
At the time, Pourhassen was CytoDyn’s CEO and president, while Kazempour is president and CEO of Amarex Clinical Research, a company that manages CytoDyn’s clinical trials and interactions with the Food and Drug Administration.
The two are accused of trying to artificially inflate and maintain the price of CytoDyn’s stock by deceiving investors about the status of the company’s submissions to the FDA. Prosecutors said Pourhassan directed Amarex to submit an incomplete biologics license application to the FDA so that CytoDyn could tell investors it had been submitted, though Pourhassan and Kazempour were aware the application would be rejected by the agency. Both men stood to benefit from the artificially high stock price by selling their own personal shares of CytoDyn, the indictment said.
“Investors must be able to rely on the statements of biotech companies about their products,” said Erek Barron, U.S. Attorney for the District of Maryland. “Executives who knowingly mislead investors must be held accountable.”
Pourhassan also allegedly made false and misleading representations about CytoDyn developing leronlimab as a possible treatment for COVID-19. CytoDyn later withdrew the license application for leronlimab, and Pourhassen was terminated several months later.
Along with the securities fraud and wire fraud charges against the two defendants in the HIV case, Pourhassan is also charged with securities fraud and wire fraud related to the COVID-19 allegations and three counts of insider trading. Kazempour is separately charged with making false statements to federal law enforcement agents. If convicted, both men face a maximum of 20 years in prison on each securities and wire fraud count, and five years for each conspiracy and false statements count.
Securities fraud takes on many forms. The attorneys at Lewitas Hyman have decades of experience dealing with securities fraud cases and have a deep understanding of how capital markets and financial service firms are intended to work to protect investors. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Lewitas Hyman at (844) 651-2643 or through our online contact form for a no-cost evaluation of your matter.