The SEC filed charges against California-based Imaging3 and its top executive, citing fraud based on how the company represented its standing with the FDA.
Imaging3, which claimed bankruptcy back in May, developed a three-dimensional scanner that the agency denied clearance thrice already, once in 2008 and twice in 2010, according to the SEC. Dean Janes, the CEO and founder charged with fraud along with his company, defended the device, which the FDA claimed was unsafe and provided low-quality images.
The SEC charged that Janes held a conference call with investors in November 2010 to market the scanner, according to the release, after the FDA denied it clearance for the third time. He didn't discuss the issues raised by the FDA, such as overheating and, as the agency puts it, "scientifically invalid and useless" images, saying "nope" when asked if there were any safety concerns. In an October letter, he also made no mention of the device's safety, the SEC asserts.
The commission charged the company and Janes with fraud, seeking a court order to cut off future violations, penalize them with fines and prohibit Janes from serving as an executive at a public company moving forward.
In SEC fashion, the commission wasn't shy about rhetorical flourishes.
"Shareholders have a right to trust corporate officers to tell them the truth about the business. When CEOs abuse that trust and make misstatements, innocent shareholders are victimized," said SEC L.A. Regional Office Director Michele Wein Layne in a statement. "The SEC will hold corporate officers accountable for misleading shareholders."
- here's the statement