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Former Biotech CEO Accused of Defrauding Investors



8/2/2017 8:29:18 AM

Former Biotech CEO Accused of Defrauding Investors August 2, 2017
By Alex Keown, BioSpace.com Breaking News Staff

PITTSFIELD, Mass. – Patrick Muraca, the former head of Nuclea Biotechnologies, is facing charges for wire fraud in connection with a scheme to defraud investors, the U.S. Department of Justice announced Monday.


According to the U.S. Securities and Exchange Commission, Muraca raised approximately $1.2 million from investors. He said the funds would be used to develop products to detect cancer and other diseases. However, approximately $400,000 of those monies were used for personal expenses.

Not only did the SEC investigate Muraca, but the DOJ became involved as well. On Monday, the DOJ said Muraca misappropriated hundreds of thousands of dollars that were purportedly to be used to advance the two startups for personal expenses, including rent, utilities, and food distributor expenses related to the operation of a restaurant owned by his fiancée. Additionally, the federal complaint said Muraca helped himself to $176,000, as well as used investor funds for cigars, tickets and tattoos and piercings.

In its complaint, the SEC “alleges that investors were never informed of the alternative uses of their investments in NanoMolecularDX LLC and MetaboRX LLC, including the fact that Muraca characterized the general character of the businesses as ‘Serving Food; Restaurant’ in separate documents he has filed with the Commonwealth of Massachusetts to do business in the state.”

Muraca has been charged with one count of wire fraud which carries a maximum sentence of 20 years in prison. His personal assets, as well as those of NanoMolecular and MetaboRX have been frozen, the SEC said.

“Patrick Muraca promised investors their money would be used to expand his businesses, but as alleged, he instead used those funds to line his pockets. Thanks to the investigative work of the FBI, Muraca must now answer for his fraud,” Joon H. Kim, the Acting United States Attorney for the Southern District of New York, said in a statement.
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Anthony Doyle, the attorney representing Muraca, told iBerkshires that they were confident that when the case went to court “a very different set of facts will emerge.”

"Mr. Muraca takes his fiduciary responsibilities seriously and we look forward to the swift resolution of this matter. Until we have more information about both the criminal charges filed in New York and the complaint filed by the Securities and Exchange Commission, we will reserve further comment,” Doyle told iBerkshires.

In 2016, Muraca founded two businesses, NanoMolecularDX LLC and MetaboRX LLC following his 2016 ouster from Nuclea Biotechnologies – a company he founded in 2005. Earlier this year, Muraca was successful in acquiring the intellectual property of Nuclea for $330,000 following that company’s failure to sell its assets in January. Nuclea filed for bankruptcy last year, several months after Muraca was fired.

Nuclea was attempting to develop a blood-based diagnostic test for breast cancer. The company acquired the test for HER2/neu for women with metastatic breast cancer that overexpresses the HER2/neu protein in 2013 when it acquired a subsidiary of Wilex AG, Wilex Inc.


Read at BioSpace.com


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