SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16342 / October 26, 1999
FINAL JUDGMENTS ENJOINING EDWARD M. BEAGAN AND CANCER MINUS, INC. FROM VIOLATING THE ANTIFRAUD PROVISIONS ENTERED IN SECURITIES FRAUD CASE
U.S. SECURITIES AND EXCHANGE COMMISSION v. EDWARD M. BEAGAN AND CANCER MINUS, INC., United States District Court, Southern District of New York, No. 95 CIV 5631
The Securities and Exchange Commission announced that on October 15, 1999, United States District Judge Richard M. Berman entered final judgments against Edward M. Beagan ("Beagan") and Cancer Minus, Inc. ("CMI"). The Court entered these judgments after finding that Beagan and CMI violated Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5, the antifraud provisions, in connection with the sale of CMI common stock to investors.
The Court granted summary judgment against Beagan, and entered a default judgment against CMI because CMI failed to defend the action. In granting these motions, the Court found that Beagan, the president and chairman of CMI, disseminated materially misleading information about CMI and its purported cancer fighting products to investors. Specifically, Beagan told investors that CMI had developed an effective cancer drug and a diagnostic test, when no such drug or test existed. Beagan told investors that CMI was in negotiations with a major pharmaceutical company regarding licensing rights to CMI's products, when no such negotiations were occurring. Beagan also falsely stated that CMI would use investors' funds to develop and produce a cancer drug when, in fact, Beagan was using investors' funds to pay his personal expenses, among other things.
The Court granted the following relief against both defendants:
Beagan, age 56, of New York City, was permanently enjoined from violating the antifraud provisions of the federal securities laws. Beagan was ordered to disgorge his ill-gotten gains of $324,700 together with pre-judgment interest of $150,130. The Court also ordered Beagan to pay $100,000 in civil penalties.
CMI, a New York corporation, was permanently enjoined from violating the antifraud provisions of the federal securities laws. CMI was ordered to disgorge its ill-gotten gains of $324,700 together with pre-judgment interest of $150,130, and to pay a $100,000 civil penalty, on a joint and several basis with Beagan.
For further information, see Commission Litigation Release No. 14575, July 28, 1995.