A federal jury in Maryland has found two men guilty of deceiving investors in CytoDyn Inc., a biotechnology company based in Vancouver, Washington. Nader Pourhassan, 61, and Kazem Kazempour, 71, were involved in misleading investors about the development of an investigational drug to artificially inflate the company's stock price.
Pourhassan served as CEO of CytoDyn, while Kazempour was CEO of Amarex Clinical Research LLC, a firm hired to conduct clinical trials for CytoDyn. They allegedly used false promises of FDA approval between 2018 and 2021 to enrich themselves while causing financial losses to investors. "With false promises of FDA approval, the defendants enriched themselves by the millions while investors lost," stated U.S. Attorney Erek L. Barron.
The scheme involved making misleading statements about regulatory submissions to the FDA for a drug purportedly treating HIV and COVID-19. Despite knowing that applications were incomplete or misleading, they continued their claims during the COVID-19 pandemic. Principal Deputy Assistant Attorney General Nicole M. Argentieri commented on their actions: "The Justice Department is committed to protecting the investing public from criminals who would exploit public health crises for personal profit."
Pourhassan sold over 4.8 million shares following false announcements about drug approvals and received $4.4 million from stock sales. Kazempour’s company received more than $22 million from investor funds raised by CytoDyn during this period.
The convictions underscore serious consequences for defrauding investors and manipulating stock prices, as noted by FBI Criminal Investigative Division Assistant Director Chad Yarbrough: "This case reinforces the FBI’s commitment to proving that no scheme...is beyond the reach of the law." Special Agent Robert Iwanicki added that those making misleading statements about clinical trials will face accountability.
Inspector Eric Shen emphasized how these individuals exploited public health crises for personal gain: "Together...Postal Inspectors will continue the work of keeping financial systems and the investing public safe from fraudsters."
Pourhassan was convicted on multiple counts including securities fraud and insider trading; Kazempour faced convictions related to securities fraud and wire fraud. Both await sentencing with potential maximum penalties reaching up to 20 years per count.
The case was investigated by FBI, FDA-OCI, and USPIS with prosecution led by attorneys from the Criminal Division's Fraud Section alongside Assistant U.S. Attorney Adeyemi Adenrele.
