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Decision Diagnostics CEO indicted on charges of securities fraud and making false statements

During the time Berman is accused of defrauding investors, Decision Diagnostics' stock rose by over 1,500%.

Mallory Hackett, Associate Editor

The CEO of the medical device company Decision Diagnostics has been indicted by a federal grand jury for his part in what the Department of Justice alleges to be a scheme to defraud investors by making false claims about a COVID-19 test developed by the company.

On December 18, the DOJ unsealed its charges against Keith Berman for one count of securities fraud and one count of making false statements that led to millions of dollars in investor losses.

According to the indictment, throughout much of this year Berman falsely led investors to believe his company had created a 15-second test to detect COVID-19 with a finger prick sample of blood. However, the indictment alleges that the test was only an idea that wasn't validated as an accurate measure of detecting COVID-19.

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The indictment also alleges that Berman and Decision Diagnostics were in a "precarious financial condition" even before the pandemic, which led to the creation of his scheme.

WHAT'S THE IMPACT?

As a part of his plot, Berman told investors that the Food and Drug Administration was on the verge of granting the Decision Diagnostics test emergency use authorization, according to the indictment.

However, the case charges that Berman intentionally hid from investors that the company lacked the financial resources and insurance necessary to conduct the clinical testing required by the FDA to complete the application process. Further, the indictment says he attempted to lobby members of Congress to put pressure on the FDA by telling them the agency had "mothballed" the company's submission and that it remained "stuck in limbo."

Another aspect of Berman's alleged scheme was an alias he used to spread false and misleading statements to investors on online message boards and to refute allegations of fraud against his company.

Between early March and late April of this year, the time during which Berman is accused of defrauding investors, Decision Diagnostics' stock rose by over 1,500%.  

THE LARGER TREND

The DOJ has made detecting, investigating and prosecuting COVID-19-related fraud schemes a priority. In October, it released a statement warning the public of any "scams perpetrated through websites, social media, emails, robocalls, and other means that peddle fake COVID-19 vaccines, tests, treatments, and protective equipment."

"A pandemic is a time when people should come together to pursue the common good, but sadly there are some who instead use it as an opportunity to deceive and thieve," said Deputy Attorney General Jeffrey A. Rosen in the statement. "From the outset, the Justice Department has acted quickly to detect, investigate, and prosecute wrongdoing relating to this crisis. Pursuing these criminals and deterring would-be bad actors will remain a priority for the foreseeable future."

At the time, it had received more than 76,000 tips regarding possible COVID-19 fraudulent behaviors, leading to federal law enforcement opening hundreds of investigations.

Twitter: @HackettMallory
Email the writer: mhackett@himss.org