SEC Sues Company That Claimed to Have
Breakthrough Cancer Treatment Alleging
Fraudulent Securities Offering That Targeted
Cancer Patients and Healthcare Workers.
Securities and Exchange Commission v.
Helvetia Pharmaceuticals, Inc., Richard A. Anders,
Nicholas Bachynsky, Arthur Scheinert, and Laurence Dean
Case No. 04-60804-CIV-JORDAN (S.D. Fla., filed June 21, 2004)
SEC The Securities and Exchange Commission (SEC) announced that on June 21, 2004, it filed a complaint against a company and four individual defendants for allegedly raising more than $3 million in a fraudulent, unregistered securities offering. The SEC's complaint names Helvetia Pharmaceuticals, Inc., Richard A. Anders, Nicholas Bachynsky, Arthur Scheinert, and Laurence Dean as defendants. The complaint alleges that defendants raised money by making fraudulent statements to investors that the money would be used to operate cancer treatment clinics.
SEC Litigation Release No. 18756 / June 21, 2004
According to the SEC's complaint, Helvetia was a Coral Springs, Florida-based company that purported to treat cancer patients using a unique, patented therapy using heat to destroy cancer cells. Helvetia, through Anders, Bachynsky, Scheinert and Dean, raised more than $3 million from approximately 50 investors from about January 2001 through at least August 2002, through the sale of unregistered Helvetia stock and promissory notes. Anders held himself out as Helvetia's president, Bachynsky was the company's medical director, Scheinert was Vice President and Dean was CFO.
The SEC's complaint alleges that the defendants used false and misleading information in Helvetia's offering materials distributed to investors to raise investor funds. Among other things, the SEC's complaint alleges that the defendants failed to tell investors that:
- Anders was convicted of securities fraud and that Bachynsky was convicted of defrauding the IRS and that his medical license was revoked;
- Helvetia's drug therapy included the use of Dinitrophenol (DNP), a banned, hazardous substance commonly found in weed killers;
- Four Helvetia investors sued Helvetia, Anders, and Scheinert for misrepresentations related to Helvetia's securities offering; and
- Investor money was not being used to fund treatment clinics, but instead was used by Helvetia insiders for personal reasons
The SEC's complaint also alleges that the defendants:
- Made exaggerated claims about Helvetia's anticipated returns; and
- Made false claims of an imminent public offering
The SEC's complaint charges Helvetia, Anders, Bachynsky and Scheinert with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 [15 U.S.C. §§ 77e(a), 77e(c) and 77q] and Section 10(b) of the Securities Exchange Act of 1934 [15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. Those sections and rules prohibit certain transactions in securities not registered with the Commission and prohibit fraud in the offer and sale, and in connection with the purchase and sale, of securities. The complaint charges Dean with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The United States Attorney's Office for the Southern District of Florida has indicted all four of the individual defendants for their role in the scheme. The SEC acknowledges the efforts of the United States Attorney's Office for the Southern District of Florida and the Federal Bureau of Investigation in this action.
This article was posted on March 16, 2004.