SEATTLE (CN) – A federal class-action complaint accuses directors of CellCyte Genetics of defrauding shareholders, after the Seattle Times reported problems in the CEO’s statements to the SEC, and reported that the company’s aggressive publicity was bankrolled by G. Brent Pierce, a Canadian citizen who is banned from the securities industry in British Columbia.
Pierce is a major shareholder in CellCyte and is named as a defendant in the federal complaint.
The Times reported numerous discrepancies in the biography that CEO and co-founder Gary Reys provided to the Securities and Exchange Commission, including statements about his education and his pharmaceutical background.
CellCyte stock plunged after the company made changes to Reys’ biography on its Web site in response to the Times story.
Reys is sued along with Executive Vice President Ronald Berninger and former director Robert Harris.
James Rapholz, editor and publisher of the newsletter Economic Advice, is also named as a defendant. Pierce allegedly paid Rapholz $445,000 to provide favorable advice about CellCyte stock.
CellCyte, which is developing stem-cell technology, was once one of the most valuable biotechnology companies in the Seattle area, though it has not performed any clinical trials in humans.
Plaintiffs are represented by Hagens Berman Sobol Shapiro.