Ex-CEO of Nanobeak Biotech Inc. was convicted on Thursday for his role in a yearslong scheme to trick investors out of millions of dollars through false claims that his company developed a breathalyzer device that could detect narcotics, cancer and other blood conditions.
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James Jeremy Barbera was convicted of securities fraud, wire fraud and conspiracy after a weeklong trial before U.S. District Judge John Koeltl in a Manhattan court.
Prosecutors say Barbera conned investors for 7 years by claiming the nanotech company had worked with NASA and Johns Hopkins University to develop narcotics and cancer-detecting breathalyzer technology. According to the government, that technology never existed.
Other misrepresentations Barbera is accused of include: falsely claiming Nanobeak was nearing an IPO, inflating his education credentials, falsely claiming that institutional investors had stakes in Nanobeak, and lying about having contracts to sell the breathalyzers to law enforcement agencies across the country.
Prosecutors noted that Barbera siphoned off more than $3.3 million of the ill-gotten funds for personal use on automobiles and jewelry. He also used money to pay his children’s tuition, his mortgage on a Central Park apartment and credit card bills.
“As the jury unanimously determined, James Jeremy Barbera lied to investors about his company’s technology and stole millions of dollars of investor funds intended for research and development,” Manhattan U.S. Attorney Damian Williams said in a statement.
Attorneys for Barbera stated what the verdict doesn’t reflect — is that “Mr. Barbera did not lie to investors about how hard he worked to achieve the objective of commercializing revolutionary technology designed to detect disease from a person’s breath, or that he genuinely believed in the viability of the technology.”
Before his time at Nanobeak, Barbera was chairman and CEO of MSGI Technology Solutions Inc., an organization who did enter into contracts with NASA in 2009. The deal provided the company with NASA’s research into breath sensor technology that could detect biomarkers for diabetes.
Later that year, MSGI launched Nanobeak as a subsidiary to hone in on the breathalyzer technology. In June 2011, the SEC suspended trading in MSGI’s stock for alleged microcap stock fraud.
In 2014 Barbera and MSGI entered into a no admit/no deny settlement with the SEC over false claims made to their investors.
Prosecutors say that following the settlement, Barbera used Nanbeak to enter into agreements with NASA, representing the subsidiary as an independent company. NASA ceased its research for Nanobeak in 2017 due to non-payment.
Barbera is scheduled to be sentenced on June 16.
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Source: https://www.law360.com/articles/1466432
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