Press Release
10 YEAR SENTENCE FOR ORCHESTRATOR OF SECURITIES FRAUD SCHEME
May 16, 2008
FOR IMMEDIATE RELEASE
R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, announced that defendant Richard A. Anders was sentenced today by U.S. District Court Judge Adalberto Jordan to 10 years in prison, followed by three years of supervised release, for his role in securities fraud scheme that led to millions of dollars of losses for investors for a start-up company for a purported novel cancer treatment drug. Anders, who is 59 years-old, received the maximum term of imprisonment under the statute.
The scheme arose out of the marketing of stock and notes for a start-up company known as Helvetia Pharmaceuticals, Inc. Helvetia’s business plan, which eventually was distributed to prospective investors, described the company’s “primary business” as being the delivery of a novel form of cancer treatment through a treatment known as intracellular hyperthermia therapy.
The business plan contained a number of material false statements. For instance, the business plan falsely claimed that Helvetia possessed exclusive rights to this form of therapy. The business plan further claimed that a “Mayo Clinic trained physician, with a Ph.D. in chemistry, has developed a . . . method to induce safe, practical intracellular hyperthermia.” The business plan, however, did not disclose that the purported Mayo Clinic trained physician was not a licensed physician and in fact had his medical license stripped by all three states in which he had been licensed. Nor did the business plan disclose the questions that existed as to the safety of Helvetia’s treatment regime.
Similarly, the business plan also failed to disclose the role of Anders as a principal in the company, as well as his federal felony record and regulatory history. In 1995, Anders was convicted in federal court for securities fraud, wire fraud, interstate transportation of monies taken by fraud, and conspiracy to commit securities fraud. Also in 1995, the United States Securities and Exchange Commission barred defendant Anders “from association with any broker, dealer, municipal securities dealer, investment adviser or investment company, effective immediately” and “from participating in an offering of penny stock.” That same year the SEC also had enjoined Anders from committing further violations of the anti-fraud provisions of the federal securities laws.
Investors were solicited by sales persons who worked at Anders’s direction – as well as by Anders himself. Anders and other Helvetia stock promoters would repeat to prospective investors the false and misleading statements contained in the Helvetia business plan. Similarly, their pitches to investors also would omit to disclose Anders’s role as a principal in Helvetia and Anders’s criminal and regulatory histories. They also would grossly exaggerate the anticipated rate of return that investors could expect, promising that Helvetia would yield returns of from 200% to 600%.
Although the business plan represented to investors, among other things, that “the Company intends to use the proceeds from the sale of the Securities for working capital and general corporate purposes,” Anders and others within Helvetia routinely misappropriated investor funds for their own purposes. This included Anders making different types of personal expenditure using accounts that were funded at in least in part by investor funds. These included paying his personal credit card bills; making automobile payments; paying for a gambling trip to Las Vegas; and directing funds to family members who did not provide services to Helvetia.
Through October 2002, Anders and other Helvetia promoters raised in excess of $5 million from more than 50 different investors. This sum included funds raised through sale of both Helvetia stock and notes payable at annual rates of return of between 8% and 12% annually. Helvetia investors suffered over $5 million in losses as a result of this scheme.
Two other co-defendants in the case, Arthur Scheinert and Laurence Dean, pled guilty and each have been sentenced to 5-year terms of imprisonment. Most recently, on May 5, 2008, following a 6 ½ week trial before Judge Jordan, co-defendant Nicholas Bachynsky was convicted of one count of conspiracy, three counts of wire fraud, and one count of securities fraud. Sentencing is scheduled for September 5, 2008 at 9:00 a.m.
Mr. Acosta commended the investigative efforts of the Federal Bureau of Investigation. Mr. Acosta also expressed appreciation for the cooperative efforts of the Southeast Regional Office of the Securities and Exchange Commission. From the summer of 2004 until his passing in late September 2007, the case was prosecuted by Assistant United States Attorney Hugo L. Black, III. This prosecution was concluded by Assistant United States Attorneys Michael Davis and Mark Dispoto.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
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