(CN) - The Securities and Exchange Commission claims the makers of a so-called HIV treatment made from goat's blood bilked investors of $20 million while concealing that the Food and Drug Administration had twice put human trials of the drug on hold.
The SEC says Immunosyn Corp. called its drug SF-1019, and claimed it could treat a variety of diseases, including AIDS, chronic inflammatory demyelinating polyneuropathy, diabetic neuropathy and diabetic ulcers.
Immunosyn misinformed investors that its parent company, Argyll Equities, "planned to commence the regulatory approval process for human clinical trials in the U.S.," according to the complaint.
"In fact," the SEC says, "persons affiliated with Argyll had already twice submitted applications to the U.S. Food and Drug Administration for approval of SF-1019, and twice the FDA immediately responded with a full clinical hold on the applications, putting an immediate halt to any possible human clinical trials."
The SEC also sued Immunosyn CEO Stephen Ferrone and CFO Douglas McClain Jr., Argyll CEO James Miceli and Argyll's Chief Science Officer Douglas McClain Sr., who is the father of Immunosyn's CFO.
"These defendants engaged in insider trading by selling Immunosyn shares while in possession of material, nonpublic information that the FDA had issued a full clinical hold on applications for regulatory approval of SF-1019 and while knowing that Immunosyn was making misleading statements about the status of the regulatory process," the SEC says.
McClain Sr. is also accused of misrepresenting the drug's prospects with the FDA on a video on the company's website, and at a presentation at a Texas holistic clinic.
Miceli is accused of ordering the issuance of a false press release that disputed "rumors" that Immunosyn was exploring a change in control.
"In fact, when Immunosyn issued this press release, Miceli [was] actively exploring such a transaction by trying to take the company private," the SEC says.
The SEC seeks disgorgement of ill-gotten gains and fines.