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Former Diagnostics Executive Ordered to Pay $443K for Defrauding Investors

NEW YORK – A federal court has ordered a former executive of several diagnostics firms to pay more than $443,000 for defrauding investors.

Late last week, the US District Court, District of Massachusetts granted a motion by the US Securities and Exchange Commission for a summary judgment and ordered Patrick Muraca to pay disgorgement in the amount of $411,684, plus prejudgment interest of $31,442 and postjudgment interest as provided by statute.

The judge in the case, F. Dennis Saylor, also issued a permanent injunction against Muraca.

Muraca, who was sentenced to jail in January 2019 for more than two years after being found guilty of wire fraud and lying to federal investigators, was the founder and CEO of cancer detection firms Nuclea Biotechnologies and NanoMolecularDx, which was founded with the assets of Nuclea Bio after it shuttered. He was also the president and CEO of oncology therapeutics company MetaboRX. 

The decision by the court stems from a civil lawsuit filed in June 2017 by the SEC against Muraca, NanoMolecularDx, and MetaboRX alleging they defrauded investors. According to court documents, between April 2016 and June 2017, 15 individuals invested nearly $1.2 million in the two firms, of which Muraca diverted at least $411,684 for his personal use, the SEC alleged.

The agency sought a summary judgment against the defendants. Specifically, the SEC asked for permanent injunctions to be issued against all three defendants, and that they pay disgorgement and prejudgment interest, and civil penalties.

Concurrent with the SEC's lawsuit, a criminal lawsuit was filed against Muraca on similar charges. In December 2017 Muraca was indicted in US District Court for the Southern District of New York on one count of wire fraud and one count of lying to the FBI. Eight months later he was convicted on both counts. 

While the criminal case was playing out, the SEC's civil case was put on hold, which was lifted this past March.  

While Saylor granted the SEC's motion for disgorgement and prejudgment interest against Muraca, he denied the agency's request for permanent injunctions and disgorgement and prejudgment interest against NanoMolecularDx and MetaboRx. He also denied the request for civil penalties against all three defendants. 

He issued an injuction against Muraca "from engaging in any act or practice in violation of" certain SEC statutes "or aiding, abetting, counseling, commanding, induction, or procuring any such act or practice."