Biotech Exec Gets 7 Years in Prison for False Claims About Rapid Covid-19 Test

The former chief executive of a biotechnology company who, during the early days of the pandemic, falsely claimed that he had invented a blood test that could detect Covid-19 in 15 seconds was sentenced on Friday to seven years in prison for securities fraud, federal prosecutors said.

From February 2020 to December 2020, the former executive, Keith Berman, 70, of Westlake Village, Calif., engaged in a scheme to defraud people into investing in his company, Decision Diagnostics Corporation, by claiming the test could detect Covid using a finger prick sample of blood, prosecutors said.

In March and April 2020, Mr. Berman issued 12 “false and misleading” news releases describing the rapid Covid test, which his company called GenViro, prosecutors wrote. Decision Diagnostics’ stock price jumped by more than 1,500 percent during the period, prosecutors said.

In reality, prosecutors said, Mr. Berman had “privately confided in a friend the test could not actually detect Covid-19.”

Prosecutors accused Mr. Berman, the sole director of the publicly traded medical device company, of capitalizing on people’s fears about the pandemic in an effort to resuscitate the company’s fortunes.

Mr. Berman’s scheme resulted in about $28 million in investor losses, prosecutors said. Mr. Berman was indicted in December 2020, and he pleaded guilty in December 2023 to securities fraud, wire fraud and obstruction of an official proceeding.

At the start of 2020, Decision Diagnostics was in perilous financial shape because, among other reasons, Mr. Berman had spent hundreds of thousands of dollars in company funds to carry on an online relationship with a webcam model, prosecutors wrote in court papers.

Mr. Berman falsely told investors that the Food and Drug Administration was on the verge of approving Decision Diagnostics’ request for an emergency use authorization for the Covid test, prosecutors said. But Mr. Berman knew that his company was unable to meet the F.D.A.’s clinical testing requirements, prosecutors wrote.

After the Securities and Exchange Commission questioned Mr. Berman’s claims about the test, prosecutors wrote in court papers, he “launched a relentless campaign of lies aimed at ruining the lives and careers of the S.E.C. staff by falsely accusing them of committing serious crimes.”

Federal prosecutors had asked that he be sentenced to 10 years in prison, calling him “a cruel and callous criminal” who “gave people false hope” that his test was a reality.

“Keith Berman not only misrepresented himself and lied about a phony Covid-19 diagnostic test to entice unsuspecting investors, but he also engaged in threats and obstructed a federal investigation,” Michael D. Nordwall, assistant director of the F.B.I.’s criminal investigative division, said in a statement.

Mr. Berman’s lawyer, Kevin B. Collins, wrote in court papers that his client had been in prison since March 2023 and asked that he be sentenced to time served. Mr. Collins wrote that Mr. Berman had put “genuine effort” into making a rapid Covid-19 blood test.

“When the Covid-19 pandemic hit, he believed he could offer the world a test kit that would give people the chance to return to some semblance of normalcy,” Mr. Collins wrote. “But he made mistakes.”

For 20 years, Mr. Berman had sold devices that helped people with diabetes monitor their blood glucose levels, using a type of technology that can detect the electrochemical signature of a blood sample, Mr. Collins wrote.

In late February 2020, as demand for Covid tests exploded, Mr. Berman believed that he could “leverage his knowledge of this technology to invent a device that could detect Covid-19 in blood,” Mr. Collins wrote.

Mr. Berman consulted with experts in the United States and South Korea to “work up design specifications, and he hired F.D.A.-savvy counsel to try and get the requisite approvals,” his lawyer wrote.

But at the time, Mr. Collins wrote, “Mr. Berman needed money, so he issued press releases misstating the status of his project to raise the funds needed to complete it and personally enrich himself from the company’s success.”

Mr. Collins noted that Mr. Berman had admitted to his crimes by pleading guilty.

“His reputation is now in tatters,” Mr. Collins wrote. “His business is destroyed. His relationship with his family is strained. And at 70, with significant medical issues and a felony conviction, his chances of living his life like before are nonexistent.”