PixarBio CEO Faces Criminal Fraud Charges

In the latest turn of what has been one of the more peculiar medtech/biotech stories to develop over the past couple years, PixarBio CEO Frank Reynolds and two of his associates were arrested Tuesday on charges of securities fraud. The arrest comes just shy of two months after PixarBio threatened to sue Reynolds' former company, InVivo Therapeutics, for libel and patent rights to the company's scaffold device. The U.S. Attorney's Office for the District of Massachusetts said Tuesday that Reynolds, Jay Herod, and Kenneth Stromsland were charged with engaging in a scheme to defraud PixarBio investors by making false and misleading statements about the company's prospects, financing, and the background and track record of Reynolds. The three are also accused of engaging in manipulative trading of PixarBio's shares. The alleged scheme dates back to about August 2013, the Department of Justice said. As one example cited in the complaint, Reynolds allegedly promised investors in a December 2015 email "a huge return on investment" from the company's NeuroRelease and went on to claim that the company was preparing to "replace morphine in the clinic in late 2017 or early 2018." The same message to investors also claimed the company's value at the time was $1 billion. PixarBio did not actually have a market value of $1 billion or a product to "end thousands of years of morphine and opiate addiction," the government alleges, but rather the prospective drug, carbamazepine, was an existin...
Source: MDDI - Category: Medical Devices Authors: Tags: Business Source Type: news