Keith Berman, the CEO of Decision Diagnostics Corporation (DECN), was indicted for securities fraud after investors purchased stock in his company hoping to profit from a revolutionary COVID-19 test which, in reality, did not exist.
Berman claimed that his company had developed a test that could detect COVID-19 from a drop of blood within 15 seconds. Berman told investors via press releases that the test would be ready for the commercial market in the summer of 2020 and raised millions of dollars in funds to support the product. However, the promised testing kits did not exist.
According to Berman’s indictment, which was unsealed Friday, DECN “did not have a product that could test for COVID-19 using a blood sample, much less one that would accurately test for COVID-19 in less than 15 seconds.”
“DECN investors lost millions of dollars by, among other things, purchasing DECN common stock at artificially inflated prices and selling their shares at a loss,” the indictment added.
Company funds were also allegedly misappropriated for personal use by Berman. The indictment alleged that Berman spent “over $360,000 in DECN company funds to pay to chat live on webcams with individuals living in foreign countries.”
Decision Diagnostics Corporation CEO Keith Berman was charged with securities fraud in connection with promoting a non-existent COVID-19 test.iStock/Getty
Berman allegedly concocted the story to drum up financial support for his failing business. Investors were allegedly informed that DECN’s COVID-19 test was on the verge of being approved by the U.S. Food and Drug Administration (FDA). That news caused DECN’s stocks to rise by more than 1,500 percent between March and April of 2020.
DECN had not applied for the government approvals or waivers required to market its purported COVID-19 test. The Korean vendor that Berman had employed to develop the test informed Berman that the technology used in the testing kit could not actually detect COVID-19. This information was not disclosed to investors.
Using the alias “plutoniumimplosion,” Berman allegedly hyped DECN on internet forums to provide false information to investors. According to the Department of Justice, Berman posted that the demand for DECN’s testing kits would be near 3 billion units. Berman allegedly denied making the posts while testifying before the SEC.
Berman was charged with one count of securities fraud and one count of making false statements. Newsweek reached out to DECN for comment.
Blood-testing chicanery also led to the closure of Theranos, which claimed to possess technology that could perform any blood test with a sample only consisting of a few drops of blood. At one point, Theranos was reported to be worth $9 billion. After reports surfaced that the technology did not live up to the company’s claims, potentially providing incorrect test results, Theranos closed its doors in 2018.
Theranos founder Elizabeth Holmes and former Theranos CEO Ramesh Balwani were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud in 2018. Both Holmes and Balwani pleaded not guilty.