New York Man Admits Defrauding Investors Over $ 3.5 Million Through Securities Offering Program | USAO-NJ
TRENTON, NJ – A New York man today admitted to carrying out a scheme to defraud more than 70 investors through a long-standing fraudulent securities offering that raised more than $ 4 million and caused losses to investors of more than $ 3.5 million, said Rachael A. Honig, acting US attorney. announcement.
Donald A. Milne III, 57, of Massapequa, New York, pleaded guilty by video conference before U.S. District Judge Michael A. Shipp to a brief accusing him of one count of securities fraud.
According to the documents filed in this case and the statements made in court:
Starting in 2012, Milne founded Instaprin Pharmaceuticals Inc. (Instaprin), a purported pharmaceutical company operating in New York City, with the stated goal of developing a fast-acting powdered form of aspirin that could instantly stop heart attacks and heart attacks. stroke. Instaprin took over from another New York-based company, SPI Acquisition Corp. (SPI), which Milne founded in 2010 with the stated purpose of acquiring assets for the development of the same fast-acting form of powdered aspirin. Milne was the founder, president and CEO of Instaprin and SPI, and exercised complete and exclusive control over them, including the offering, marketing and sale of securities issued by these entities.
From 2013 until 2018, Milne executed a scheme to defraud dozens of investors in Instaprin and SPI securities through multiple and continuous material misrepresentation regarding, among other things, how the money of the The victims’ investment would be used and how their past investments had been made, so that Milne could embezzle substantial sums of investor money for his own personal gain and enrichment. Through at least four separate unregistered securities offerings that he had issued by Instaprin or SPI between 2013 and 2016, Milne received more than $ 4 million in investment proceeds from victimized investors across the country and has deposited the investment funds in one or more bank accounts that he controlled.
Milne has misrepresented to victimized investors how he and Instaprin / SPI would store and use funds raised through Instaprin stock offerings. For example, Milne indicated in the written offering documents sent to investors that their investment funds would be used to pay Instaprin’s “normal day-to-day operating expenses”, as well as “the costs involved in the development and maintenance. marketing of its products ”, including“ batch / stability testing ”,“ Manufacturing ”,“ Market consultant / advertising ”and“ Salaries / rent / insurance [and] General working capital. Milne also falsely portrayed in the offering documents that he had assembled “a very strong world-renowned board of directors and medical advisory board” which included industry leaders in the fields of science and science. finance. Milne also misrepresented to investors that specific individuals joined Instaprin as directors, advisers and / or shareholders of Instaprin, when in fact these individuals were not involved with Instaprin. Milne made numerous false and misleading statements in investment updates distributed to investors between April 2014 and September 2018, including: Instaprin’s product had been approved by the United States Food and Drug Administration (FDA) ; Instaprin was nearing a product launch and takeover bid; and Instaprin had contracted with a New Jersey research company for an FDA-approved clinical trial. Milne also indicated that Instaprin was in negotiations with large pharmaceutical companies for joint ventures, which Milne said were imminent. Milne made these and other similar statements knowing they were false and misleading.
Milne embezzled a substantial majority of investors’ funds to pay distributions to other investors like a Ponzi scheme; pay for Milne’s personal expenses, including Caribbean vacations, boating expenses, divorce payments, clothing, and spa treatments; and to support and operate Island Raceway & Hobby Inc., a miniature racing car business separately owned by Milne.
In May 2019, the Securities and Exchange Commission filed a civil lawsuit against Milne and Instaprin in federal court in New Jersey regarding the fraudulent scheme to which Milne pleaded guilty today. This issue was resolved by the entry of final judgments prohibiting Milne and Instaprin from violating the offending provisions of federal securities laws, ordering full restitution, pre-judgment interest and civil penalties.
The securities fraud charge to which Milne pleaded guilty carries a potential maximum sentence of 20 years in prison and a fine of $ 5 million. Judgment is scheduled for March 24, 2021.
Acting U.S. Attorney Honig credited the special agents of the FBI Resident Agency in Trenton, under the direction of Special Agent in Charge George M. Crouch Jr. in Newark, with the investigation leading to the guilty plea of ‘today. She also thanked the Philadelphia regional office of the SEC, under the leadership of Kelly L. Gibson, for their substantial assistance with the investigation.
The government is represented by Assistant US Attorney J. Brendan Day, Attorney-in-Charge of the US Attorney’s Office in Trenton, and Assistant US Prosecutor Heather Suchorsky of the Economic Crimes Unit in Newark.