A federal jury in Maryland has found two biotech executives guilty of securities fraud for deceiving investors about the development of an investigational drug by CytoDyn Inc., a biotechnology company based in Vancouver, Washington. The verdict was delivered on December 10, 2024.
Nader Pourhassan, aged 61 from Lake Oswego, Oregon, and Kazem Kazempour, aged 71 from Potomac, Maryland, were convicted for their roles in a scheme that misled investors regarding the progress of CytoDyn’s drug intended to treat HIV and COVID-19. The fraudulent activities took place between 2018 and 2021.
U.S. Attorney Erek L. Barron for the District of Maryland stated: “With false promises of FDA approval, the defendants enriched themselves by the millions while investors lost.” Principal Deputy Assistant Attorney General Nicole M. Argentieri emphasized the Justice Department's dedication to protecting investors: “The Justice Department is committed to protecting the investing public from criminals who would exploit public health crises for personal profit.”
Pourhassan and Kazempour made misleading statements about CytoDyn’s regulatory submissions to the Food and Drug Administration (FDA). In spring 2020, they falsely claimed that an application had been submitted for HIV treatment approval when it was incomplete. Following this announcement, Pourhassan sold over 4.8 million shares of CytoDyn stock.
Additionally, Pourhassan misrepresented information regarding leronlimab as a potential COVID-19 treatment despite knowing its clinical studies had failed. Throughout this period, CytoDyn raised approximately $300 million from investors.
Chad Yarbrough from the FBI Criminal Investigative Division remarked: “This case reinforces the FBI’s commitment to proving that no scheme...is beyond the reach of the law.” Robert Iwanicki from FDA Office of Criminal Investigations noted: “These convictions demonstrate that those who make misleading statements about clinical trial results...will be held accountable.”
Eric Shen from U.S. Postal Inspection Service added: “Together with our law enforcement partners, Postal Inspectors will continue...keeping financial systems and the investing public safe from fraudsters.”
Pourhassan faces multiple charges including securities fraud and insider trading; Kazempour was convicted on counts related to securities fraud and wire fraud concerning FDA applications. Both await sentencing which could result in up to 20 years imprisonment per count.
The investigation involved collaboration among FBI, FDA-OCI, and USPIS agencies with prosecution led by attorneys Lauren Archer and Matthew Reilly alongside others.