David Johnston CFO used to be the chief financial officer of ImmunoGen. However, he had to step down from that position when the SEC found him guilty of fraud and misleading investors.
SEC attorney, Eric Fornii even compared David Johnston CFO to a shady used car salesman. The attorney pointed out that he had schemed to defraud biotech investors by telling them that the FDA had many positive things to say about Tivo.
While he noted that the FDA had some concerns, it was similar to a salesman telling a customer that the engine might make a few noises while leaving out the part about needing an entirely new engine.
The jury found David Johnston CFO liable for securities fraud.
According to the SEC, he had played a significant role in misleading investors. He tried to push the line that Tivo was heading into the market. However, he didn’t tell them about the many issues Richard Pazdur’s group at the FDA had regarding their trial design.
Also, the FDA had issues with how Tivo was described to investors.
David Johnston CFO didn’t care about all that. When the media reached out to ImmunoGen (his employer at the time), they said the case was not related to them so they couldn’t comment.
While they kept him as the chief financial officer for the rest of that year, David Johnston CFO resigned.
It was a civil proceeding after all. Recently, the FDA has expressed concerns about how several biotechs tend to mislead investors while describing their dealings with the agency.
SEC has even raised this subject by issuing a public warning to biopharma. However, the FDA is bound by law to stay silent.
More Details on the Case Against David Johnston:
Aveo, the company for which David made misleading claims, has a rocky history. The company faced a lot of backlash from the regulators when the company pushed for approval of Tivo in 2013 even though a study showed a 25% fatality risk.
When that happened, the company’s stock prices plummeted. For the subsequent years, David Johnston CFO, and his colleagues tried to mitigate the negative impact of the FDA’s statements.
Eventually, the company entered into a settlement agreement with the SEC. They would pay $4 million after an $18 settlement with shareholders.
Aveo’s shareholders had sued the company for failing to disclose the concerns the FDA had raised.
What is Investment Fraud?
Investment fraud constitutes a white-collar criminal activity wherein individuals intentionally mislead or deceive investors to achieve financial gains. It is unlawful for any party to conceal essential information regarding investments, including associated risks, with the intent of persuading investors to invest their capital.
Where is David Johnston’s CFO Now?
According to his online profiles and latest updates, David Johnston CFO has launched DBJ Consulting.
His current title is – Biotechnology Financial Executive and Fractional CFO.
He served at ImmunoGen, Inc. for 9 years and he had to leave that firm after he was found guilty of fraud.
Before that, he was at Aveo as their CFO for 6 years.
David Johnston CFO has an MBA from the University of Michigan – Stephen M. Ross School of Business and a Bachelor of Science in Commerce from Washington & Lee University.
Conclusion
There are plenty of fraudsters in the biotech industry. Investors and professionals need to be extremely careful who they deal with in this sector.
For example, Dr Leen Kawas is another top-level biotech executive who was found guilty of lying in her research papers. Although her company tried its best to cover up the whole story, it had to sever ties with her eventually.
Still, she didn’t lose any of her shares in the firm and earned dividends for lying in her research papers.
The case of David Johnston CFO is similar. He lied to investors about what the FDA said about his company’s product.
The only party that suffered losses in this deal were the investors. They were misguided and misled.
The company was trying to recover from the negative impacts of the statements issued by the FDA, though the company suffered a loss.
People like David aren’t worried about the lives of others and are always willing to get their pockets filled with profit, their main business is to earn profit and scam their users.
Let these people suffer for their evil and destructive mentality.
When the SEC warned them they should have taken one step further and let them suffer after being imprisoned or some other stricter action should be taken against them.
The company doesn’t worry about their fake research and the lives of others, the moment it was discovered that Tivo is harmful and even can be fatal, even after this research they were advertising their company.
The company was promoting Tivo even after the study discovered its fatality risk, we need to be wise before investing with these scammers.
This man is suffering warnings from the SEC which reflects their real business and scamming their investors based on their fake advertisement.
Need to invest in some other firm for keeping a safer side for your future, can’t trust his fake claims.
The author has explained the scam in a very creative manner, the third paragraph clicked with me hard, and I laughed very hard, avoid investing with these people, they are running scams.
They should be targeted by the authorities for stopping their illegal business.
Many higher authorities are helping these scammers from being punished and are taking the advantage of the support from these powerful entities.
Avoid investing with this man so that he can never hurt your sentiment after scamming you and taking away your hard-earned money, thus it is very important to make them realize that they are not away from the government’s legal authorities.
Avoid investing with this man so that he can never hurt your sentiment after scamming you and taking away your hard-earned money, thus it is very important to make them realize that they are not away from the government’s legal authorities.
Now this is strange that this criminal is allowed open his own private firm after being caught producing fake research papers and then trying to finalize a deal over curing cancer, but the most shocking thing caught in the research was that it has a 25% of fatality risk.
This man tried to mislead the investors based on his fraudulent schemes regarding his biotech company named Tivo, which reflects his real personality, which is very much nefarious.
Some more rules should be set regarding the cases like David Johnston’s so that in the future no other researcher could plan to produce fake claims about curing cancer.
People like David are trying to make people suffer because of their careless and money-minded behavior, which could lead to cause severe health issues for the users.
Many biotech companies tend to hide the facts relate to their research papers and try to get the deal done at any cost, the government needs to make necessary changes for outsourcing these deals.
This is a case of half murder where he knowingly published tivo even after acknowledging its 25% fatal risk, even though it was shown in research where the claims of fatality risk were mentioned.
Now it is time to restrict these criminals from getting fame because of their degrees and also having connections with several popular firms and trying to misuse their position.
The serious problem to look into is that David was freed without getting the required amount of punishment, the most heartbreaking moment is when these criminals move freely without any serious sanctions provided.
This case is very dangerous and also grabbing the attention of various biotech firms, statements provided by the SEC attorney should be considered, and set some new rules in the biotech industry to avoid cases like these.
This man is freed from the court without any sentence regarding his imprisonment. This is not the only case where fraudsters like Johnston aren’t even provided with the required punishment according to the crimes they commit.
Can’t believe this guy was allowed to walk off like that when being guilty of defrauding all of his investors. Just goes to show how horrible the entire justice system is.
ImmunoGen was left ashamed because of the frauds which Johnson committed over there, now next scams will take place through Biotechnology firms, and there should be some warnings issued from the government against this scammer.
These scammers are getting attention because of the degrees they hold from famous Universities, taking the example of David who passed his MBA from The University of Michigan, and learned his concepts for the development of the related sector but now they are misusing their knowledge for filling their pockets after scamming thousands of their investors.
I can’t understand how someone can be freed after committing fraud related to the biotech industry, this shows how justice is working, and the most shocking thing is that even many fraudsters aren’t placed in the courts for trials. There must be special changes for scammers like Johnston.
There were many fraudsters found fooling investors about their research and were charged with lying in their research papers, which shows the carelessness of these scammers regarding the health of the people. Then you have this man who was legit caught lying about cancer medicine.
When it comes to investing in the Biotech industry investors need to beware of these scammers like Johnston as they will sue you for their profit. I think it is your responsibility to investigate the future of these so-called frauds. Why would companies assign him the role of CFO again? Stop attaching that respectable term to the name of this cheap liar.
Biotech has a lot of crooks like this. They lie and mislead investors to keep filling their wallets. I’m disappointed to see that David didn’t get any jail sentence. Defrauding investors should have stricter punishments. Otherwise you would keep getting scammers like him making fools out of gullible investors.