The US Securities and Exchange Commission (SEC) is headquartered in Washington, DC, May 12, 2021.
Andrew Kelly | Reuters
Laura Tyler Perryman, co-founder and former CEO of medical device startup Stimwave Technologies, has been indicted for allegedly defrauding investors of $41 million by making “false and misleading” statements about one of her devices, according to complaint filed with the US Securities and Exchange Commission on Tuesday.
The complaint alleges that Perryman misrepresented a Stimwave device that was supposed to be able to treat chronic nerve pain using electrical signals. The device consisted of a transmitter, an electrode array and a receiver, which was “in effect, fake and nothing more than a piece of plastic,” according to the SEC. The fake and non-functional device was allegedly implanted into the patients’ bodies, the complaint said.
Perryman also allegedly told investors that the device, called a peripheral nerve stimulator (PNS), was “the only effective device of its kind on the market” and had been approved by the US Food and Drug Administration, according to the SEC .
“We allege that Perryman advertised a purportedly innovative medical pain relief device while concealing that a major component of the device was fake and that patients were unwittingly undergoing unnecessary surgery to implant the non-functional component into their bodies,” said Monique C. Winkler. director of the SEC’s San Francisco regional office, said a liberation.
The complaint accuses Perryman of violating the anti-fraud provisions of the federal securities laws. The SEC is seeking permanent injunctive relief, a civil penalty, disgorgement plus prejudgment interest and an officer and director attorney, according to the filing.
Perryman had no comment and referred CNBC to her attorney, who did not immediately respond.
The SEC’s complaint follows the indictment of Perryman by the US Attorney’s Office for the Southern District of New York in March. He was arrested in Delray Beach, Fla., and charged with conspiracy to commit wire fraud and health care fraud and one count of health care fraud, according to release.
The SDNY on Tuesday filed a superseding indictment against Perryman, which added charges of criminal securities fraud, the SEC said.
Stimwave filed for voluntary Chapter 11 bankruptcy protection in June 2022. Curonix, a peripheral nerve stimulation company, acquired Stimwave’s assets at the end of last year. Stimwave voluntarily recalled the PNS devices, but Curonix still offers a PNS system called the Freedom PNS, according to Curonix website.
Curonix representatives did not immediately respond to CNBC’s requests for comment.