BALTIMORE, MD—Two CEOs were convicted by a federal jury in Maryland for a scheme to defraud investors about a drug being developed to treat HIV and COVID-19, according to the U.S. Department of Justice.

Nader Pourhassan, 61, of Lake Oswego, Oregon, and Kazem Kazempour, 71, of Potomac, Maryland, were found guilty of the scheme involving CytoDyn Inc., a publicly traded biotechnology company based in Vancouver, Washington.

Pourhassan was CytoDyn’s CEO, and Kazempour was Amarex Clinical Research’s CEO, which conducted CytoDyn’s clinical trials.

The Justice Department said in a press release that, between 2018 and 2021, CytoDyn sought approval from the Food and Drug Administration (FDA) for the drug to treat HIV and COVID-19. Pourhassan and Kazempour diverted scheme proceeds for personal gain, including by selling their inflated CytoDyn shares.

U.S. Attorney Erek L. Barron for the District of Maryland alleges that the defendants enriched themselves by millions with false promises of FDA approval, leading to investor losses.

Pourhassan and Kazempour were accused of lying about the timeline and status of the regulatory submissions to the FDA, according to the department.

“In spring 2020, the pair falsely stated that the drug had been submitted for approval to treat HIV, when they knew that the submitted application was incomplete and that the FDA would therefore refuse to review it,” the Justice Department said.

The two CEOs were indicted back in 2022.

The department said Pourhassan sold more than 4.8 million shares of CytoDyn after the false announcement.

Pourhassan and Kazempour also misrepresented the status of CytoDyn’s investigation and development of leronlimab as a potential treatment for COVID-19, according to the department.

CytoDyn raised approximately $300 million from investors during the scheme, the Justice Department said, and Kazempour’s company was paid more than $22 million of that.

Pourhassan received $4.4 million and Kazempour received more than $340,000 from sales of CytoDyn stock, according to the department.

Pourhassan was convicted of four counts of securities fraud, two counts of wire fraud, and three counts of insider trading.

Kazempour was convicted of securities and wire fraud related to submitting the application for FDA approval and attempting to trade Cytodyn shares the next day.

Sentencing is scheduled for a later date.

The CEOs face a maximum of 20 years in prison for each count of securities fraud, wire fraud, and insider trading.

This article was written with the assistance of AI and reviewed by a human editor.

Photo by Sora Shimazaki from Pexels