Risk & Compliance

Cancer-Fighting Investments Went to Fund Restaurants

The SEC filed charges against a Massachusetts businessman for misusing investment funds intended for two pharmaceutical development companies.
Vincent RyanJuly 31, 2017

The Securities and Exchange Commission today filed charges to stop an alleged ongoing fraud by a Massachusetts businessman misusing investments intended for the development of cancer diagnostic tests.

According to the SEC’s complaint, Patrick Muraca established two pharmaceutical development companies and raised nearly $1.2 million by representing to investors that their money would be used to develop products to detect cancer and other diseases. Instead, the money went to fund Muraca’s fiancée’s restaurant businesses.

The SEC has traced the flow of investor funds into Muraca’s personal bank account and alleges that at least $400,000 has been used to pay rent for the restaurants and fund other purchases by Muraca, including payments to a casino, automotive shop, and cigar shop.

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The SEC alleges that investors were never informed of the alternative uses of their investments in NanoMolecularDX LLC and MetaboRX LLC, including the fact that Muraca characterized the general character of the businesses as “Serving Food; Restaurant” in separate documents he filed with the Commonwealth of Massachusetts to do business in the state.

The website of NanoMolecularDX describes it as being focused on “diagnostic assays and kits for the early detection and monitoring of biomarkers in oncology and endocrinology.” MetaboRX’s website says it is “building novel therapies for cancer and metabolic disease.”

At least 15 individuals invested in the companies between April 2016 and the present.

The SEC on Monday obtained a court order freezing the assets of Muraca and his companies.

“As alleged in our complaint, we’re intervening to protect investors because Muraca has veered from his stated intentions and has been using their money for purposes other than the fight against cancer and other diseases,” said Paul Levenson, director of the SEC’s Boston regional office.

In a parallel action on Monday, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Muraca.