On August 22, 2017, the Securities and Exchange Commission confirmed it had obtained a final judgment against the founder and CEO of BioChemics Inc. John J. Masiz of Topsfield, Massachusetts was charged with making false statements about collaborations with pharmaceutical companies and the status and results of drug trials for the company’s main product.
The final judgment was officially entered by consent on August 18, 2017. It permanently enjoins the defendant from future violations and imposes a conduct-based injunction and an officer-and-director bar. Simultaneously, Masiz has been ordered to pay a $120,000 penalty.
According to the SEC complaint, BioChemics, Masiz and co-conspirators were accused of engaging in a fraudulent scheme to sell company securities to approximately 70 investors. The scheme, which ran from 2009 until the middle of 2012, netted at least $9 million. Investors caught up in the scheme resided in 19 different states.
The defendant was accused of misrepresenting to investors that BioChemics was engaged in ongoing research and development collaborations with certain pharmaceutical companies. In early 2010, the defendants claimed that the company had two drugs under FDA review. In reality, no products were under FDA review from 2009 to 2012. The company also attempted to conceal the fact that Masiz was the subject of a previous Commission securities fraud action, which resulted in a final judgment against him in 2004.
Investors were told that Masiz was not taking a salary at BioChemics. The complaint alleges that Masiz had used investor funds for personal expenses, such as meals, clothing, sporting goods, and massages. It was also alleged that investor funds were utilized to pay Masiz a salary indirectly through the company’s subsidiary.
The entry of judgment resolves the litigation against Masiz in its entirety. Previously, the SEC acquired a $17 million judgment against BioChemics, as well as a separate judgment against a promoter of BioChemics stock. That promoter was not a registered broker. The SEC dismissed a complaint against a decreased promoter.