Some scams are more interesting than others. Take the one that was allegedly concocted by an imaginative group of execs from Immunosyn and its controlling shareholder, Argyll Biotechnologies. They told investors about plans to seek FDA approval for trials of a compound known as SF-1019, which was derived from goat’s blood and was touted for treating HIV, diabetic ulcers and several other ailments.

But there was a catch. The public filings issued from 2006 to 2010 failed to disclose that the FDA had twice issued clinical holds on applications for SF-1019, which meant clinical trials could not be conducted, according to a complaint filed by the US Securities and Exchange Commission. The agency also maintained Immunosyn misleadingly stated that the regulatory approval process in Europe for human clinical trials for SF-1019 was imminent or underway, although Argyll never submitted an application in Europe to conduct any trials (read here).

And the SEC charged Immunosyn chief financial officer Douglas McClain Jr.; Argyll chief scientific officer Douglas McClain Sr., and Argyll ceo James Miceli with insider trading since they raised approximately $20 million from their sale of Immunosyn shares while knowing that misrepresentations were being made about the regulatory status of SF-1019 (here is the complaint and you can read about them here).

“These executives routinely authorized public filings that told investors a story about the status of the company’s prized drug that was far different from the behind-the-scenes reality,” Merri Jo Gillette, Regional Director of the SEC’s Chicago Regional Office says in a statement. “Three of these executives went one step further to illegally profit from their tall tales by selling their company stock and reaping more than $20 million while repeatedly misleading investors about the drug.”

And they sold their shares by using an elaborate arrangement - by using Argyll and two other shareholders named in the SEC’s complaint. There was Argyll Equities, which McClain Jr. and Miceli jointly owned, and an offshore entity Padmore Holdings, which McClain Jr., McClain Sr., and Miceli jointly owned. Immunosyn ceo Stephen Ferrone was also charged, by the way.

To illustrate the extent to which the execs went, the SEC claims McClain Sr. misstated the regulatory approval status of SF-1019 in a video on the Immunosyn website. And he allegedly did the same thing in a 2008 presentation in which he sold Immunosyn stock he owned through Padmore to patients at a Texas holistic clinic, some of whom were terminally ill. He raised approximately $300,000 from 15 of the patients, but the SEC charges, never gave them the shares they bought. Some shareholders caught on and filed lawsuits against Immunosyn, according to previous SEC filings.

goat thx to demosh on flickr creative commons