Equipping People To Make Sense Of What They Are Told
The Securities and Exchange Commission announced that on August 1, 2011, it charged
Immunosyn Corporation (“Immunosyn”) and Argyll Biotechnologies, LLC (“Argyll”), both
based in San Diego, California, with securities fraud in connection with materially
misleading statements during 2006-2010 regarding the status of regulatory approvals
for Immunosyn’s sole product, a drug derived from goat blood referred to as “SF-1019.”
The Commission also charged Stephen D. Ferrone (“Ferrone”), of Lake Forest, Illinois,
who was Immunosyn’s Chief Executive Officer (“CEO”), Douglas McClain Jr. (“McClain
Jr.”), of Savannah, Georgia, who was Immunosyn’s Chief Financial Officer, Douglas
McClain, Sr. (“McClain Sr.”), of Boerne, Texas, who was Argyll’s Chief Scientific
Officer, and James T. Miceli (“Miceli”), of Poway, California, who was Argyll’s CEO,
all with securities fraud; and it also charged Argyll, McClain, Jr., McClain, Sr.,
Miceli, Argyll Equities, LLC (“Argyll Equities”), based in San Diego, California,
and Padmore Holdings, Ltd. (“Padmore”), an offshore entity, all with insider trading.
The Commission’s complaint, filed in federal court in Chicago, alleges that Immunosyn
misleadingly stated in public filings with the Commission that Argyll, Immunosyn’s
controlling shareholder, planned to commence the regulatory approval process for
human clinical trials for SF-1019 in the U.S. or that regulatory approval was underway.
The complaint alleges that these statements misled investors because the statements
omitted to disclose that the U.S. foodstuffs and Drug Administration (“FDA”) had
already twice issued clinical holds on drug applications for SF-1019, which prohibited
clinical trials involving SF-1019 from occurring. The complaint also alleges that
Immunosyn misleadingly stated that the regulatory approval process in Europe for
human clinical trials for SF-1019 was imminent or underway, when in fact Argyll never
submitted an application in Europe to conduct human clinical trials.
The Complaint alleges that McClain Jr., McClain Sr., and Miceli engaged in insider
trading by raising approximately $20 million from their sale of Immunosyn shares
while knowing that Immunosyn was making misrepresentations about the regulatory status
of SF-1019.
The Complaint alleges that they sold most of these shares through Argyll and Argyll
Equities, which McClain Jr. and Miceli jointly owned, and Padmore, which McClain
Jr., McClain Sr., and Miceli jointly owned.
The Complaint also alleges that McClain Sr. made misstatements about the status of
regulatory approval of SF-1019 in a video on Immunosyn’s public website, and 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.
The Complaint alleges that McClain Sr. raised approximately $300,000 from these patients
but never gave them the shares they bought.
The Commission’s complaint seeks a final judgment permanently enjoining the defendants
from future violations of the antifraud provisions of the federal securities laws,
ordering each defendant to disgorge all ill-gotten gains, plus prejudgment interest,
ordering each defendant to pay civil penalties, and barring Ferrone, McClain Jr.,
McClain Sr. and Miceli from serving as an officer or director of a public company.
The Commission acknowledges the assistance of the U.S. foodstuffs and Drug Administration.
