The CEO of Decision Diagnostics, a West Village, Calif.-based medical device company, has been charged with securities fraud in connection with an alleged scheme to defraud investors by making false statements about the purported development of a new COVID-19 test.
Keith Berman was charged in an indictment unsealed Dec. 18, according to the U.S. Justice Department. He's accused of falsely claiming that his company had developed a 15-second test to detect COVID-19 in a finger prick sample of blood, when the test was merely an idea and not a validated method of accurately detecting the virus.
According to the indictment, Mr. Berman and Decision Diagnostics were on shaky financial footing before the pandemic hit. He wrote in internal emails that he needed a "new story" to "raise millions," according to the Justice Department.
The indictment further alleges that Mr. Berman told investors earlier this year that the FDA was on the verge of approving Decision Diagnostics' request for emergency use authorization of the new COVID-19 test. At that time, the company allegedly lacked the financial resources and insurance required to conduct the clinical testing required by the FDA to complete the application process.
Between early March and April, 23, 2020, the time during which Mr. Berman is accused of making the false statements, Decision Diagnostics' stock price rose by more than 1,500 percent, according to the Justice Department.
As part of the alleged scheme, Mr. Berman also is accused of using an alias to repeat false and misleading statements to investors on online message boards and to refute allegations of fraud.
The alleged scheme resulted in investors losing millions of dollars, according to the Justice Department.