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The CEO of a California biotech company, Decision Diagnostics, claimed to have a finger-prick test that could detect Covid-19 and used multiple fake identities to pump up the company\u2019s stock price, authorities said. The CEO, Keith Berman, was sentenced on Friday to seven years in prison for the fraud that led to $28 million in investor losses, according to the Department of Justice.<\/a>\u00a0<\/p>\n He pleaded guilty in December to securities fraud, wire fraud, and obstruction of an official proceeding.<\/p>\n \u201cAt 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,\u201d Principal Deputy Assistant Attorney General Nicole Argentieri, head of the Justice Department\u2019s Criminal Division, said in a statement on Friday.<\/p>\n Authorities said Berman, 70, made numerous false statements to investors, even claiming that he didn\u2019t pay himself as the CEO of Decision Diagnostics, despite using $360,000 of company funds to pay for live chats on webcams with people in foreign countries. He did this as the company\u2019s faced serious financial difficulties, according to the indictment.<\/p>\n In the scheme detailed in the complaint, Berman hatched a plan in March 2020 to use the pandemic to solve the Westlake<\/a> Village, Calif.-biotech\u2019s financial problems. He adopted a fake name, \u201cMatthew Steinmann,\u201d to pose as a friend of his to pretend to talk with investors. Using the alias, Berman also posted fake messages about the biotech firm to investors on message boards to gin up enthusiasm and artificially pump up the company\u2019s stock price. <\/p>\n He used other aliases, such as \u201cplutonium\u201d and \u201cplutoniumimplosion,\u201d to refute allegations on the online message boards Investors Hub (iHUB) and Investors Hangout that it was Berman himself was making misleading claims about the biotech company. He even denied in one post that he was Berman, the indictment says. And while using the plutoniumimposion name, he said he was a Decision Diagnostic investor of 20 years. Regulators said Berman posted over 1,000 messages on the iHUB message board to pump up the stock price.<\/p>\n Officials said Berman claimed in March 2020 to have a Korean vendor who could develop a Covid-19 test to detect the virus in blood or saliva and published press releases touting the \u201cbreak-through\u201d and \u201cnew screening methodology.\u201d Berman said his test would shorten the schedule for development of Covid tests and that they would be ready to go to market in summer 2020. In reality, the company didn\u2019t have a test and hadn\u2019t taken any steps to get government approval or waivers that would be required before a test could be offered to human beings, the indictment states. All the while, the vendor Berman claimed to be working with kept telling him that his test method was unlikely to be scientifically viable.\u00a0<\/p>\n The case has a similar theme to the $10 billion fraud involving Theranos and its founder Elizabeth Holmes, who was sentenced in 2022 to 11 years in prison. Holmes claimed to investors to be making progress on a blood-sugar test that only needed a drop of blood to work.\u00a0<\/p>\n In Berman\u2019s case, authorities said he heard from a vendor that his method of testing for coronavirus wasn\u2019t possible, but days later Berman published a press release saying that the vendor had \u201csuccessfully validated a test\u201d that could detect the virus in a blood sample. Berman kept it up throughout March and April in 2020, and the company\u2019s stock price soared 1500% before the SEC suspended trading.<\/p>\n Berman then lied to the SEC and federal law enforcement about using the fake names and posting messages, the indictment states. He continued using the plutoniumimplosion alias to threaten people who may have complained about the biotech company to the SEC, warning them about \u201cknock knock day.\u201d He said officials would show up at the homes of those who complained about the company to arrest them. Berman later used the Matthew Steinmann alias to recruit another person on a message board to write a letter to the SEC on his behalf, calling an SEC attorney \u201cFredo,\u201d the ne\u2019er-do-well brother of the Michael Corleone character in The Godfather <\/em>films, the indictment says.<\/p>\n Berman\u2019s lawyer, Kevin Collins, wrote in court papers that\u00a0Berman had put in a \u201cgenuine effort\u201d toward making a Covid blood test, \u201cbut he made mistakes,\u201d acknowledging that Berman misstated the status of his project to raise funds.<\/p>\n<\/div>\n\nSubscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n