SAN DIEGO (CN) – A former senior vice president of research and development at Sequenom, a biotech company, pleaded guilty Wednesday to a federal charge of conspiring to commit securities fraud, the U.S. Attorney’s Office said. Elizabeth Dragon’s sentencing and final acceptance of her plea are set for Aug. 30.
Dragon admitted that she conspired to defraud shareholders about the company’s screening test of Down syndrome.
“Dr. Dragon admitted that she and others caused Sequenom to issue press releases and various statements to investors and others falsely claiming that the Down syndrome test had been evaluated in ‘blinded’ studies – that is, that the scientists conducting the tests did not know the actual outcomes,” San Diego’s new U.S. Attorney, Laura Duffy, said in a statement announcing the plea.
“In fact, as Dr. Dragon admitted, the tests were not ‘blinded’ because scientists either knew the outcomes before testing the samples, or had been directed to change their initial results so that the final results matched the true outcomes. Dr. Dragon also acknowledged she and others caused Sequenom to falsely claim that the test’s reliability and accuracy were nearly perfect. Dr. Dragon further admitted that she personally gave such false and misleading information about the test to investors, analysts and others during meetings in Vancouver, New York, and San Diego.
“Dr. Dragon admitted that these false and misleading statements were designed to inflate and sustain the price of Sequenom’s stock. On April 29, 2009, after the close of the market, Sequenom announced a substantial delay in the commercial release of the Down syndrome test and an internal investigation due to ’employee mishandling of R&D test data and results.’ The following day, Sequenom’s stock price dropped by more than 75 percent.”