By Anthony Silva, WBZ NewsRadio 1030 New England Business Editor

BOSTON (CBS) – The SEC says is alleging that Bio Defense of Boston has misled investors. Bio Defense sells machines that it says detect Anthrax.

The SEC accuses Bio Defense of running boiler room operations to hawk securities to overseas investors.

WBZ NewsRadio 1030’s Anthony Silva reports

David Bergers, Director of the SEC Boston office, says investors were told that their investments would not be used to pay employees or company officers, because they were deferring their compensation until the company became profitable, or until it went public. The company has so far not gone public, and never become profitable, but its senior officers have together been paid over $4 million.

Bergers tells me that Bio Defense claims to have developed and successfully sold a machine called Mail Defender that neutralizes Anthrax or other pathogens that are in the mail.

The SEC alleges that Bio Defense hired marketers to run a boiler room operation. Bergers says the company had people in call centers whose sole mission was to find offshore investors for the company, and who lied to those investors to pique their interest. But neither Bio Defense nor the boiler room operators told investors that 75% of the money raised would go into the pockets of the boiler room operators, not into the company’s operations.

And as for how well those machines work? Bergers says the SEC alleges that at least one company officer told an investor that Bio Defense had already sold 175 machines, and had orders for thousands more. According to Bergers, Bio Defense, in its 10 year history, has sold fewer than 10 machines.

Bergers says the next phase of the case will be decided in a federal courtroom.


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