Health care investment fraud is on the rise. On February 16, 2016, Oceanside businessman Greg Ruehle admitted to securities fraud (15 U.S.C. §§ 78j, 78ff) involving more than
160 people out of investments totaling nearly $2 million. As
part of his plea to securities fraud charges, Mr. Ruehle admitted being hired by
local medical research firm ICB International, Inc. (ICBI) to identify investors who
could fund their research.
Instead, Mr. Ruehle collected millions of dollars from investors and used the money for his own gambling and other personal expenses. Mr. Ruehle disguised and concealed his fraud by issuing the investors fake stock certificates and failing to report the purported “investment” to the company. In a parallel action, the Securities and Exchange Commission today announced civil charges against Ruehle.
In 2015, some of the investors asked for proof that their money was being used at ICBI. In response, Ruehle sent them a letter on what appeared to be company letterhead, and purportedly signed by the company’s CEO. In fact, the letter was a forgery, which was borne out by the fact that Mr. Ruehle misspelled the CEO’s name.
ICBI remained unaware of these “investors,” and never received a penny of their $1.9 million investments. San Diego-based ICBI’s mission is to develop technologies to transport therapeutic treatments through the blood-brain barrier to treat neuro-degenerative diseases like Parkinson’s and Alzheimer’s disease. Mr. Ruehle’s plea agreement requires that he forfeit the $1.9 million in proceeds and pay restitution to the victim investors.
Health care businesses and investors need to be vigilent about due diligence when investing in health care businesses. We have seen many investment disputes which were not properly documented and investors were not properly issued shares.
Instead, Mr. Ruehle collected millions of dollars from investors and used the money for his own gambling and other personal expenses. Mr. Ruehle disguised and concealed his fraud by issuing the investors fake stock certificates and failing to report the purported “investment” to the company. In a parallel action, the Securities and Exchange Commission today announced civil charges against Ruehle.
In 2015, some of the investors asked for proof that their money was being used at ICBI. In response, Ruehle sent them a letter on what appeared to be company letterhead, and purportedly signed by the company’s CEO. In fact, the letter was a forgery, which was borne out by the fact that Mr. Ruehle misspelled the CEO’s name.
ICBI remained unaware of these “investors,” and never received a penny of their $1.9 million investments. San Diego-based ICBI’s mission is to develop technologies to transport therapeutic treatments through the blood-brain barrier to treat neuro-degenerative diseases like Parkinson’s and Alzheimer’s disease. Mr. Ruehle’s plea agreement requires that he forfeit the $1.9 million in proceeds and pay restitution to the victim investors.
Health care businesses and investors need to be vigilent about due diligence when investing in health care businesses. We have seen many investment disputes which were not properly documented and investors were not properly issued shares.
