Biotech
Wednesday, December 20th, 2023 4:31 pm EDT
Key Points
- Fraudulent Misrepresentation and Fake Medical Device: Laura Tyler Perryman, co-founder and former CEO of Stimwave Technologies, faces charges of defrauding investors amounting to $41 million. The U.S. Securities and Exchange Commission (SEC) alleges that Perryman made false and misleading statements about a Stimwave device designed to treat chronic nerve pain. The device, comprising a transmitter, electrode array, and receiver, was misrepresented, with the SEC claiming the receiver was “fake and nothing more than a piece of plastic.” Shockingly, this non-functional component was allegedly implanted into patients’ bodies, constituting a severe case of fraudulent misrepresentation.
- Deceptive Claims and Concealment from Investors: Perryman is accused of misleading investors by asserting that the peripheral nerve stimulation (PNS) device was the “only effective device of its kind on the market” and had received approval from the U.S. Food and Drug Administration (FDA). The SEC contends that Perryman not only promoted the device as an innovative medical pain-relief solution but also concealed critical information about the fake and non-functional component. Investors were allegedly kept in the dark about the fraudulent nature of the device, leading to significant financial losses and potential harm to patients who underwent unnecessary surgeries to implant the misrepresented component.
- Legal Consequences and Ongoing Investigation: The SEC has charged Perryman with violating federal securities laws’ antifraud provisions, seeking permanent injunctions, a civil penalty, disgorgement with prejudgment interest, and an officer and director bar. Perryman, who did not comment on the allegations, directed inquiries to her lawyer, who has yet to respond. This legal action follows Perryman’s earlier indictment by the U.S. Attorney’s Office for the Southern District of New York in March, where she faced charges related to wire fraud, health care fraud, and one count of health care fraud. A superseding indictment, adding criminal securities fraud charges, was filed by the Southern District of New York. Stimwave Technologies, the company at the center of the allegations, filed for Chapter 11 bankruptcy protection in June 2022, and its assets were acquired by Curonix. While Stimwave voluntarily recalled the PNS devices, Curonix continues to offer a PNS system called Freedom PNS. However, representatives for Curonix have not yet responded to CNBC’s requests for comment, leaving the situation and the fate of the ongoing investigation uncertain.
Laura Tyler Perryman, the co-founder and former CEO of medical device startup Stimwave Technologies, is facing charges of defrauding investors to the tune of $41 million. The U.S. Securities and Exchange Commission (SEC) filed a complaint alleging that Perryman engaged in deceptive practices by making “false and misleading” statements regarding one of Stimwave’s devices.
The device in question was purportedly designed to treat chronic nerve pain through the use of electrical signals. The SEC alleges that Perryman misrepresented this device, which consists of a transmitter, an electrode array, and a receiver. Shockingly, the SEC claims that the receiver, believed to be a crucial component, was actually “fake and nothing more than a piece of plastic.” What’s more, the complaint asserts that this non-functional component was allegedly implanted into patients’ bodies.
Perryman is accused of misleading investors by asserting that the device, known as the peripheral nerve stimulation (PNS) device, was the “only effective device of its kind on the market” and had received approval from the U.S. Food and Drug Administration (FDA).
The SEC contends that Perryman not only promoted what she claimed to be an innovative medical pain-relief device but also concealed critical information about the fake and non-functional component. Patients, unbeknownst to them, allegedly underwent unnecessary surgeries to implant a component that did not serve its intended purpose.
Monique C. Winkler, the director of the SEC’s San Francisco regional office, stated, “We allege that Perryman touted a supposedly innovative medical pain-relief device while concealing that a primary component of the device was fake, and that patients were unwittingly undergoing unnecessary surgeries to implant the non-functional component into their bodies.”
The SEC’s complaint accuses Perryman of violating federal securities laws’ antifraud provisions. The SEC is seeking permanent injunctions, a civil penalty, disgorgement with prejudgment interest, and an officer and director bar.
Earlier in March, Perryman was indicted by the U.S. Attorney’s Office for the Southern District of New York. The charges included one count of conspiracy to commit wire fraud and health care fraud and one count of health care fraud. Perryman’s arrest in Delray Beach, Florida, followed these charges.
In a subsequent development, the Southern District of New York filed a superseding indictment against Perryman, adding criminal securities fraud charges.
Stimwave Technologies, the company at the center of these allegations, filed for voluntary Chapter 11 bankruptcy protection in June 2022. Its assets were later acquired by peripheral nerve stimulation company Curonix. Stimwave voluntarily recalled the PNS devices, but Curonix continues to offer a PNS system called Freedom PNS, as indicated on its website.
As of now, representatives for Curonix have not responded to CNBC’s requests for comment on this matter. Perryman, on the other hand, has not commented and directed inquiries to her lawyer, who has yet to respond. The legal proceedings shed light on a concerning case involving alleged deception, fake medical components, and the exploitation of investor trust in the healthcare technology sector.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/12/19/sec-charges-ex-ceo-of-stimwave-with-fraud-says-some-devices-were-fake.html
