SEC Obtains Judgment Against Massachusetts Biotechnology Executive for Defrauding Investors

April 3, 2020/US SEC

On April 2, 2020, the U.S. District Court in Massachusetts entered a final judgment against Patrick Muraca and two biotechnology companies he controlled, NanoMolecularDX, LLC and MetaboRX, LLC for defrauding investors, ordering Muraca to disgorge over $400,000 in ill-gotten gains.

According to the SEC’s complaint, filed on July 31, 2017, Muraca established two pharmaceutical development companies and raised nearly $1.2 million by representing that investor money would be used to develop products to detect cancer and other diseases. The SEC traced the flow of investor funds into Muraca’s personal bank account and alleged that at least $400,000 had been used to pay rent for the restaurants and fund other purchases by Muraca, including payments to a casino, automotive shop, and cigar shop. The SEC’s complaint alleged that investors were never informed of the alternative uses of their investments in NanoMolecularDX, LLC and MetaboRX, LLC.

On December 5, 2019, the court granted the SEC’s motion for summary judgment, finding that Muraca, NanoMolecularDX, LLC and MetaboRX, LLC had violated the securities laws, and now the court has entered the final judgment, permanently enjoining Muraca from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, barring Muraca from acting as an officer or director of a public company, and ordering Muraca to pay $411,684 in disgorgement, plus $31,442 in prejudgment interest, and post-judgment interest.

On August 8, 2018, in a related criminal action in the U.S. District Court for the Southern District of New York, Muraca was found guilty on all charges, including one count of wire fraud and one count of making false statements to federal law enforcement officers. Muraca was sentenced to 27 months imprisonment on January 10, 2019.

The Commission thanks the U.S. Attorney’s Office for the Southern District of New York for its assistance.

Leave a Comment

Your email address will not be published. Required fields are marked *

*