BioDefense Corporation engages in the research and development of solutions for the homeland security and mitigation of bioterrorism. The company offers MailDefender that annihilates anthrax and other harmful pathogens; and MAIL SAFE CHECK, an incoming mail diagnostic tool that determines dangerous pathogens. It serves banking institutions, Las Vegas hotels, congressional offices, foreign embassies, The U.S. Department of Justice, The U.S. Department of Defense, alcohol tobacco and firearms, and The United Nations. The company was founded in 2001 and is headquartered in Boston, Massachusetts.
12 Channel Street
Marine Industrial Park
Boston, MA 02210
Founded in 2001
The Securities and Exchange Commission Files an Enforcement Action in Federal Court Against BioDefense Corporation
Sep 10 12
On September 10, 2012, the Securities and Exchange Commission filed an enforcement action in federal court in Boston charging Bio Defense Corporation and others for their roles in a fraudulent offering of unregistered Bio Defense securities. The defendants are charged with defrauding investors through various misrepresentations and schemes while raising at least $26 million in investor funds. According to the Commission’s complaint, filed in the United States District Court for the District of Massachusetts, Bio Defense began engaging in unregistered offers and sales of securities to investors in the United States by at least 2004 and, after attracting the attention of various domestic state regulators in 2008, began utilizing 'boiler room' firms to assist in selling shares of Bio Defense securities to overseas investors primarily in the United Kingdom. The Commission’s complaint alleges that, while making unregistered offers and sales of securities to US investors from at least 2004 through August 2008, Lu, Morrone, and Jurberg made false claims to investors that Bio Defense was not paying financial compensation to its employees and officers. The complaint further alleges that these individuals gave potential investors the false impression that Bio Defense preserved its cash assets by having employees who worked for no, or very little, pay, suggesting that these employees were working solely or primarily for “sweat equity” shares, which might later become valuable when the company became profitable or underwent an initial public offering of stock. In fact, Bio Defense’s expense during those years was the money it paid to Lu, Morrone, and Jurberg and other employees from funds raised from investors; in 2004 alone, Bio Defense paid approximately $1 million in compensation to its officers and employees. The Commission’s complaint further alleges that, as Bio Defense began raising money overseas in August 2008, the defendants transformed the company into a deceptive and fraudulent device designed to enrich its principals while also paying as much as 75% of investor proceeds as commissions to its overseas boiler room fundraisers. From August 2008 through approximately July 2010, Bio Defense’s most substantial source of cash generation and most significant expense was not manufacturing and selling machines, but instead was its securities promotion and sales activities. Bio Defense and its representatives did not tell investors that 75% of funds received from them would be going straight to boiler room operators. The Commission alleges that all defendants violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; that Bio Defense, Lu, Morrone, Jurberg and Orth violated Sections 5(a) and 5(c) of the Securities Act; and that Lu, Morrone, Jurberg, Hamburger and Orth violated Section 15(a)(1) of the Exchange Act. The Commission also alleges, in the alternative, that Lu and Morrone are liable under Section 20(a) of the Exchange Act as control persons of Bio Defense for Bio Defense’s violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 thereunder. The SEC seeks in its action permanent injunctions, disgorgement plus prejudgment interest, civil penalties, and, against Lu, Morrone, Jurberg and Orth, officer and director bars.