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Decision Diagnostics CEO Pleads Guilty to Fraud Over COVID-19 Test Claims

NEW YORK – The US Department of Justice said Friday that Decision Diagnostics CEO Keith Berman has pleaded guilty to fraud charges over false claims early in the COVID-19 pandemic that his company had developed a rapid blood-based test that could accurately detect COVID-19.

Prosecutors alleged that Berman, of Westlake Village, California, tried to secure investments through a series of false and misleading statements from February 2020 through December 2020 that his firm had developed a 15-second test to detect COVID-19 through a finger-prick blood sample.

"Despite his claims to the investing public, Berman knew that no such test existed," the DOJ said in a statement.

He also told investors that the US Food and Drug Administration was nearing approval of Emergency Use Authorization for this test despite knowing his company couldn't meet the agency's clinical testing requirements, the DOJ said.

In December 2020, the US Securities and Exchange Commission said in a complaint filed in the US District Court for the Southern District of New York that Berman and his company had made the claims about their COVID-19 testing abilities at a time when they lacked any proven method to detect the virus or any physical testing device. The company had forecast up to $525 million in sales of COVID-19 test kits within the first year of production.

"Further, its advisors had warned that the testing kit they were trying to manufacture would not work as Decision Diagnostics had described," the SEC said at the time.

The DOJ said Friday that Berman and Decision Diagnostics had been in a "precarious financial condition" ahead of the pandemic, and Berman wrote in internal company emails that he needed a "new story" that could raise millions of dollars. He had also spent hundreds of thousands of dollars on personal expenses despite claims that he was forgoing compensation.

Prosecutors also said Berman used false identities to repeat his false and misleading statements on message boards, refute allegations of fraud, threaten whistleblowers with civil and criminal sanctions, and direct an investor to write false and threatening letters to management at the SEC, which was investigating Berman's conduct.

Berman pleaded guilty to charges that he committed securities fraud and wire fraud and obstructed an SEC investigation into his conduct, the DOJ said. He is scheduled for sentencing April 12, 2024.