The house won again on Wednesday. The one-time "King of Biotech" David Blech has admitted guilt to securities fraud stemming from an elaborate trading scheme to juice the stock prices of two biotech companies. Blech, who was convicted for similar security sins in 1998, suffers from manic depression and betting on stocks like a casino "gambler," his attorney told The Associated Press.
Blech came clean in federal court in Manhattan yesterday after authorities accused him of manipulating the stocks of Pluristem Therapeutics ($PSTI), a developer of stem cell therapies, and Intellect Neurosciences ($ILNS), which focuses on treatments for Alzheimer's disease. He set up a slew of accounts in the names of relatives and others and bought and sold the stocks from those accounts to create the appearance of an active market for the shares, Bloomberg reported.
The SEC yesterday filed separate charges against Blech and his wife for the same fraudulent activity. Pluristem and Intellect haven't been implicated in the stock scam, which allegedly took place from 2007 to 2008. Blech's lawyer Roland Riopelle said he's probably seeking a 41- to 51-month sentence for his client, who faces up to 40 years in prison, Bloomberg reported. Blech told the court that he was lured back into the biotech stock game when he was trying to dig himself out of debt, but he ended up losing millions on Pluristem.
"Blech tried to rig the market in favor of his own investments and create a mirage of activity in the stocks of biopharmaceutical companies for which he was soliciting investors," said George S. Canellos, director of the SEC's New York Regional Office, in a statement. "But he seriously misjudged the SEC's determination to ensure that the securities markets function fairly."
- here's the SEC release
- read the AP article
- check out Bloomberg's report
- and Reuters' coverage