Medical Device CEO Charged in COVID-19 Test Fraud Scheme

The executive told investors that a 15-second test was on the verge of FDA approval, even though his company lacked funding, clinical research, and an actual product.

Keith Berman is the CEO of Decision Diagnostics, a medical device company based in Westlake Village, California. The Department of Justice announced Friday that Berman, 67, was indicted by a federal grand jury in connection with an alleged scheme to defraud investors. Berman allegedly made false and misleading statements about a new COVID-19 test, which led to millions of dollars in investor losses.

According to the indictment, from Feb. 2020 through this month, Berman engaged in a scheme to defraud investors by falsely claiming Decision Diagnostics had developed a 15-second test to detect COVID-19 in a finger-prick sample of blood. 

Berman knew his test was merely a concept and not a validated COVID-19 test, much less an actual product ready for manufacture and sale. 

Berman also lied when he told investors that the Food and Drug Administration was on the verge of approving emergency use authorization for the company's test. He knew the company lacked the money and insurance necessary to conduct the required clinical testing.

Berman then hired a lobbyist to tell members of Congress that the FDA “moth-balled” his test, which remained “stuck in limbo.” At the same time, he told investors that the test was on the verge of approval. By April 23, the company’s stock price had risen by more than 1,500%.   

The executive also allegedly used the alias “plutoniumimplosion” to repeat false statements to investors on internet message boards, refute fraud allegations, and threaten potential whistleblowers with civil or criminal sanctions.  

Behind the plutoniumimplosion cloak, he projected demand for the test to be “close to 3 billion [test] kits.” In sworn testimony to the Securities and Exchange Commission, Berman reportedly denied posting on the message board.

Berman faces one count of securities fraud and one count of making false statements. Decision Diagnostics did not respond to a request for comment. 

Under the guise of plutoniumimplosion, in an online post, Berman allegedly wrote, “then again the 5-6 message board posters [claiming the DECN test was fraudulent] may be right and Mr. Berman will find himself in prison.”

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