Two CEOs Convicted in Fraud Scheme Involving HIV and COVID-19 Drug Development
BALTIMORE, MD — Two CEOs have been convicted by a federal jury in Maryland for orchestrating a scheme to deceive investors about a drug being developed to treat HIV and COVID-19, the U.S. Department of Justice announced.
Nader Pourhassan, 61, of Lake Oswego, Oregon, and Kazem Kazempour, 71, of Potomac, Maryland, were found guilty of defrauding investors through CytoDyn Inc., a publicly traded biotechnology firm based in Vancouver, Washington. Pourhassan served as CEO of CytoDyn, while Kazempour was CEO of Amarex Clinical Research, the company conducting CytoDyn’s clinical trials.
Between 2018 and 2021, CytoDyn sought FDA approval for its drug to treat HIV and COVID-19. According to the Justice Department, Pourhassan and Kazempour misused the funds raised for the drug’s development, personally profiting by selling inflated shares of CytoDyn.
U.S. Attorney Erek L. Barron for the District of Maryland stated that the two defendants enriched themselves by millions of dollars through false claims of FDA approval, resulting in significant investor losses. The Justice Department accused them of misleading the public about the regulatory status of their submissions to the FDA.
In spring 2020, the CEOs falsely claimed the drug had been submitted for approval to treat HIV, even though they knew the application was incomplete and would be rejected by the FDA. The department noted that Pourhassan sold over 4.8 million shares of CytoDyn stock after this false announcement.
Additionally, the two men misrepresented the progress of CytoDyn’s drug, leronlimab, as a potential COVID-19 treatment. The company raised approximately $300 million from investors during the scheme, and Kazempour’s company received more than $22 million of that amount. Pourhassan personally made $4.4 million from the stock sales, while Kazempour made over $340,000.
Pourhassan was convicted of four counts of securities fraud, two counts of wire fraud, and three counts of insider trading. Kazempour was found guilty of securities fraud and wire fraud related to their submission for FDA approval and subsequent attempts to trade CytoDyn shares.
Sentencing is scheduled for a later date. Both men face up to 20 years in prison for each count of securities fraud, wire fraud, and insider trading.
