He pleaded responsible in December to securities fraud, wire fraud, and obstruction of an official continuing.

“On the top of the COVID-19 pandemic, Keith Berman gave folks false hope that his biotech firm had developed a fast blood check to detect COVID-19. However there was no such check. Berman defrauded traders to revenue from the pandemic,” Principal Deputy Assistant Legal professional Basic Nicole Argentieri, head of the Justice Division’s Felony Division, mentioned in an announcement on Friday.

Authorities mentioned Berman, 70, made quite a few false statements to traders, even claiming that he didn’t pay himself because the CEO of Resolution Diagnostics, regardless of utilizing $360,000 of firm funds to pay for dwell chats on webcams with folks in international nations. He did this as the corporate’s confronted severe monetary difficulties, in line with the indictment.

Within the scheme detailed within the criticism, Berman hatched a plan in March 2020 to make use of the pandemic to resolve the Westlake Village, Calif.-biotech’s monetary issues. He adopted a faux title, “Matthew Steinmann,” to pose as a buddy of his to faux to speak with traders. Utilizing the alias, Berman additionally posted faux messages in regards to the biotech agency to traders on message boards to gin up enthusiasm and artificially pump up the corporate’s inventory worth.

He used different aliases, resembling “plutonium” and “plutoniumimplosion,” to refute allegations on the net message boards Buyers Hub (iHUB) and Buyers Hangout that it was Berman himself was making deceptive claims in regards to the biotech firm. He even denied in a single put up that he was Berman, the indictment says. And whereas utilizing the plutoniumimposion title, he mentioned he was a Resolution Diagnostic investor of 20 years. Regulators mentioned Berman posted over 1,000 messages on the iHUB message board to pump up the inventory worth.

Officers mentioned Berman claimed in March 2020 to have a Korean vendor who may develop a Covid-19 check to detect the virus in blood or saliva and printed press releases touting the “break-through” and “new screening methodology.” Berman mentioned his check would shorten the schedule for improvement of Covid checks and that they’d be able to go to market in summer season 2020. In actuality, the corporate didn’t have a check and hadn’t taken any steps to get authorities approval or waivers that might be required earlier than a check might be supplied to human beings, the indictment states. All of the whereas, the seller Berman claimed to be working with stored telling him that his check methodology was unlikely to be scientifically viable. 

The case has an identical theme to the $10 billion fraud involving Theranos and its founder Elizabeth Holmes, who was sentenced in 2022 to 11 years in jail. Holmes claimed to traders to be making progress on a blood-sugar check that solely wanted a drop of blood to work. 

In Berman’s case, authorities mentioned he heard from a vendor that his methodology of testing for coronavirus wasn’t doable, however days later Berman printed a press launch saying that the seller had “efficiently validated a check” that would detect the virus in a blood pattern. Berman stored it up all through March and April in 2020, and the corporate’s inventory worth soared 1500% earlier than the SEC suspended buying and selling.

Berman then lied to the SEC and federal regulation enforcement about utilizing the faux names and posting messages, the indictment states. He continued utilizing the plutoniumimplosion alias to threaten individuals who might have complained in regards to the biotech firm to the SEC, warning them about “knock knock day.” He mentioned officers would present up on the houses of those that complained in regards to the firm to arrest them. Berman later used the Matthew Steinmann alias to recruit one other individual on a message board to write down a letter to the SEC on his behalf, calling an SEC lawyer “Fredo,” the ne’er-do-well brother of the Michael Corleone character in The Godfather movies, the indictment says.

Berman’s lawyer, Kevin Collins, wrote in courtroom papers that Berman had put in a “real effort” towards making a Covid blood check, “however he made errors,” acknowledging that Berman misstated the standing of his mission to boost funds.