The Securities and Exchange Commission today filed charges to stop an alleged ongoing fraud by a Massachusetts businessman misusing investments intended for the development of cancer diagnostic tests to instead pay personal expenses and fund his fiancée’s restaurant businesses.
According to the SEC’s complaint, Patrick Muraca established two pharmaceutical development companies and raised nearly $1.2 million by representing to investors that their money would be used to develop products to detect cancer and other diseases. The SEC has traced the flow of investor funds into Muraca’s personal bank account and alleges that at least $400,000 has been used to pay rent for the restaurants and fund other purchases by Muraca, including payments to a casino, automotive shop, and cigar shop.
The SEC alleges that investors were never informed of the alternative uses of their investments in NanoMolecularDX LLC and MetaboRX LLC, including the fact that Muraca characterized the general character of the businesses as “Serving Food; Restaurant” in separate documents he has filed with the Commonwealth of Massachusetts to do business in the state.
The SEC today obtained a court order freezing the assets of Muraca and his companies.
“As alleged in our complaint, we’re intervening to protect investors because Muraca has veered from his stated intentions and has been using their money for purposes other than the fight against cancer and other diseases,” said Paul Levenson, Director of the SEC’s Boston Regional Office.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Muraca.
The SEC’s complaint charges Muraca, NanoMolecularDX, and MetaboRX with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The complaint seeks disgorgement of ill-gotten monetary gains plus interest and penalties.
The SEC’s case is being handled by Emily Holness, Rebecca Israel, Mark Albers, Marty Healey, and Amy Gwiazda of the SEC’s Boston office. The SEC appreciates the assistance of the FBI and the U.S. Attorney’s Office for the Southern District of New York.