BioPure Exec Sentenced to Three Years for Faking Cancer to Avoid SEC Probe
Howard Richman better hope there's no such thing as karma. The former BioPure vice president was sentenced last month to three years in prison for faking cancer to avoid an SEC investigation.
The investigation centered on BioPure's communications with investors regarding Hemopure, a bovine-derived blood substitute. The product gained approval in South Africa but was turned down by the FDA in 2003. At the time, BioPure characterized the agency's rejection as relatively positive given that new clinical trials were not required, and the stock jumped 20 percent.
Apparently, BioPure failed to mention that the FDA had raised safety concerns about Hemopure and placed a clinical hold on other trials. According to the Boston Globe, that information was omitted from SEC filings as BioPure raised some $35 million that year, triggering the wrath of an SEC already fed-up with biotech hype.
And that's when Richman had an inexplicable lapse in judgment. According to the Globe:
Thomas Moore, the former chief executive, agreed to pay a $120,000 settlement. The company settled without paying a fine the year before. Jane Kober, Biopure's general counsel, and Carl Rausch, its former vice chairman and senior technology officer, each paid $40,000 fines. Richman was the only person who contested a settlement at that time.As the SEC tried to proceed with its case, Richman said he had colon cancer and couldn't participate in depositions and such. He submitted a fake doctor's note and impersonated his doctor in a phone call with his lawyer. As time went on, he claimed the cancer had spread and was terminal, and a judge ended the litigation against him.
But later that year, Richman's lawyers abruptly resigned (hmmm--wonder why) and his new lawyers came clean to the judge. He pleaded guilty to one count of obstruction of justice in March, and in October he was sentenced to three years in prison.
BioPure wouldn't talk about the issue with the Globe, distancing itself by saying Richman hadn't worked there for years. But the company is not exactly free and clear of questionable judgment calls: Last year it filed a lawsuit against an NIH researcher who had published an unfavorable article about Hemopure in the Journal of the American Medical Association and pushed for the product's withdrawal in South Africa. Trying to sue a scientist for publishing data that shows your product is unsafe may not be as bad as faking cancer, but it ain't good.
BioPure filed for Chapter 11 bankruptcy in July.
Jail cell photo by Flickr user my_southborough, CC.