SEC Pays Whistleblower Rewards for Coronavirus Related Fraud Tips
While many of us are looking out for our families and neighbors during this difficult time, fraudsters are looking for new ways to steal money by preying on people’s anxieties and need to make ends meet. Fortunately, the SEC remains fully staffed and has committed its full resources to prosecuting those who seek to exploit the pandemic.
Whistleblowers with inside information about frauds involving publicly traded companies are eligible for cash rewards. Since the SEC’s Whistleblower Program began in 2011, about $300 million in rewards have been paid out. This year looks to break all records despite slowdowns caused by the pandemic. (More on the rewards below.)
The SEC is actively monitoring our markets for frauds, illicit schemes and other misconduct affecting investors related to COVID-19. On February 7th before coronavirus was a household word, the SEC suspending trading of a pharmaceutical company stock after claims began circulating that the company had developed a treatment for the disease. Since then the SEC has taken action against dozens more companies all related to COVID-19.
Companies that falsely claim they have developed a cure, cheap test or vaccine for coronavirus are at the top of the government’s radar.
Recent SEC COVID-19 Fraud Enforcement Actions
On June 22nd, the SEC suspended trading of shares of Blackhawk Growth Corp., a Canadian company. Blackhawk reportedly issued press releases claiming the company had developed a COVID-19 antibody test. The company claimed it had developed a COVID-19 antibody test that would produce results in just 15 minutes and was “exceptionally” accurate. Without disclosing details, the SEC said it had enough concerns about those claims that it took the extraordinary step of suspending trading.
As of this writing trading remains suspended.
On June 9th, the SEC filed an emergency action and obtained an asset freeze against five people and six offshore companies. Some of the allegations centered around two Canadian companies, Sandy Steele Unlimited and WOD Retail Solutions. According to the Commission, the companies were peddling “false and misleading information designed to fraudulently capitalize on the COVID-19 pandemic.” For example, the alleged promotions included phoney or exaggerated claims that Sandy Steele could produce medical quality facemasks and that WOD Retail had automated kiosks for retailers to use in response to the COVID-19 pandemic.
Federal prosecutors in Boston brought parallel criminal charges against one of the men.
On May 14th, the SEC took emergency action against two companies for lying about COVID-19 finger prick tests. According to the SEC,
“[Applied BioSciences] issued a press release on March 31 stating that it had begun offering and shipping supposed finger-prick COVID-19 tests to the general public that could be used for ‘Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results.’ The complaint alleges that contrary to these claims, the tests were not intended for home use by the general public and could be administered only in consultation with a medical professional. The complaint further alleges that Applied BioSciences had not shipped any COVID-19 tests as of March 31, and its press release failed to disclose that the tests were not authorized by the U.S. Food and Drug Administration.”
A companion complaint against another company, Turbo Global, said the company falsely claimed that it began a “multi-national public-private-partnership” to sell thermal scanning equipment to detect individuals with fevers. The company further claimed that its new technology could be instrumental in “breaking the chain of virus transmission through early identification of elevated fever, one of the key early signs of COVID-19.”
According to the SEC, there was no partnership with any governmental entity and its CEO knew those claims to be false.
List of SEC COVID-19 Fraud Actions
Here is the current list of SEC COVID-19 Fraud enforcement actions and suspensions as of July 12th:
- SEC v. Gomes, et al. (6/9/2020)
- SEC v. Nielson (6/9/2020)
- SEC v. Applied Bioscience (5/14/220)
- SEC v. Turbo Global et al. (5/14/2020)
- SEC v. Praxsyn Corporation et al. (4/28/2020)
- Blackhawk Growth Corp. (6/22/2020)
- Micron Waste Technologies Inc. (5/26/2020)
- WOD Retail Solutions Inc. (5/20/2020)
- Custom Protection Services, Inc. (5/5/2020)
- CNS Pharmaceuticals Inc. (5/1/2020)
- Moleculin Biotech, Inc. (5/1/2020)
- WPD Pharmaceuticals, Inc. (5/1/2020)
- Nano Magic Inc. (4/30/2020)
- Kleangas Energy Technologies, Inc. (4/27/2020)
- Decision Diagnostics Corp. (4/23/2020)
- Predictive Technology Group, Inc. (4/21/2020)
- SpectrumDNA, Inc. (4/21/2020)
- SCWorx Corp. (4/21/2020)
- PreCheck Health Services, Inc. (4/16/2020)
- Bravatek Solutions, Inc. (4/15/2020)
- BioXyTran, Inc. (4/15/2020)
- Signpath Pharma, Inc. (4/15/2020)
- Applied BioSciences Corp. (4/13/2020)
- Arrayit Corporation (4/13/2020)
- Solei Systems, Inc. (4/10/2020)
- Roadman Investments Corp. (4/10/2020)
- Parallax Health Sciences, Inc. (4/10/2020)
- Turbo Global Partners, Inc. (4/9/2020)
- BioELife Corp. f/k/a/ U.S. Lithium Corp. (4/9/2020)
- Key Capital Corporation (4/7/2020)
- Prestige Capital Corp. (4/7/2020)
- Wellness Matrix Group, Inc. (4/7/2020)
- Sandy Steele Unlimited Inc. (4/3/2020)
- No Borders, Inc. (4/3/2020)
- Praxsyn Corporation (3/25/2020)
- Zoom Technologies, Inc. (3/25/2020)
- Eastgate Biotech (2/24/2020)
- Aethlon Medical, Inc. (2/7/2020)
No doubt there are many more companies that simply haven’t been caught yet.
SEC Whistleblower Rewards and COVID-19 Fraud
Since 2011, the SEC has paid whistleblowers generous rewards for reporting fraud. To be eligible for a reward, your information must be “original source” meaning inside. The information also must be about a company listed with the SEC. That includes brokerage firms, publicly traded companies and foreign companies whose sales can be purchased on a U.S. exchange.
In addition to generous rewards, other benefits of the SEC Whistleblower Program include the ability to remain anonymous (but only if filed by a lawyer) and strong anti-retaliation provisions.
In recent years we have helped our whistleblower clients receive over $100 million in rewards. To learn more, visit our SEC whistleblower reward page. Ready to see if you qualify for a reward? Contact us online, by email or by phone at 202-800-9791.
We accept SEC COVID-19 fraud cases nationwide and worldwide. All inquiries protected by the attorney – client privilege and kept strictly confidential.