Court Orders CEO of Fake Spencer Pharma to Pay Bilked Investors $7 Million
Published: Oct 05, 2015
October 2, 2015
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON – A Massachusetts court has ordered Jean-Francois Amyot, the chief executive officer of the fictitious Boston-based Spencer Pharmaceuticals, Inc., to pay $7 million to investors he fraudulently bilked, the Boston Business Journal reported this morning.
Judge Indira Talwani entered a default agreement against Amyot and Spencer Pharmaceuticals, along with IAB Media Inc. and Hilbroy Advisory Inc., two other companies controlled by Amyot, after Amyot failed to appear for the hearings, the Boston Globe reported. Spencer Pharmaceuticals had a Boston address, but federal officials who charged the company with falsifying its research data in order to artificially inflate stock prices, said it performed all its business in Canada. The Boston address acted as a call center for the fictitious company, the Journal said.
Talwani’s ruling bars Amyot from serving as a director or officer of a public company, or from participating in a penny stock offering, the Journal said. Amyot, who did not attend the court proceedings, told the Boston Globe that the court’s process was unfair and that he could not afford to mount a proper defense as he has been unemployed since 2011. He is facing similar charges in Canada.
Previously the court ruled against Maximilien Arella and Ian Morrice, two of Spencer’s officers. The duo were both fined $50,000 and barred from serving as a director or officer of a public company and from participating in a penny stock offering for a period of five years.
In 2012, the U.S. Securities and Exchange Commission charged Amyot and officers listed for Spencer Pharmaceuticals for their roles in a “pump-and-dump” scheme involving Spencer’s stock.
According to the complaint, Amyot and Spencer “disseminated false and misleading press releases claiming that it had received an unsolicited buyout offer from a Mideast company for $245 million when, in fact, the purported buyout offer was not real.” The federal complaint alleged Amyot and his confederates had a scheme to promote Spencer’s stock in order to drive up prices, allowing Amyot and other Spencer colleagues to sell at “artificially inflated prices.” During the time the buyout offer was being promoted, Amyot sold approximately 36 million Spencer shares for gross proceeds of approximately $5.8 million, the complaint said.
Spencer Pharmaceuticals billed itself as a “US based Pharmaceutical Research and Development Corporation, which is developing innovative drug release and absorption systems for the treatment of metabolic diseases such as diabetes and metabolic syndrome,” according to old press releases.
In 2011, Spencer claimed “His Excellency Hussain Al-Awaid (Al-Dorra group)” proposed to buy out Spencer for $245 million in an all cash deal before March 17, 2011. Those claims have since been proven to be false.
Other claims Spencer Pharmaceuticals made include the submission of a patent application for technology covering a “dual release rate of anti-inflammatory drugs.” In the March 2011 statement, Spencer claimed the company’s technology could “dual release rate of anti-inflammatory drugs.”