SEC announces details in fraud case against BioDefense Corp.

An official from the U.S. Securities and Exchange Commission recently discussed new details concerning its allegations that a Boston-based biodefense company committed fraud against its investors.

David Bergers, the director of the SEC's Boston office, said that BioDefense Corp. told investors that its funds would not be used to pay employees and company officers because compensation was being deferred until the company turned a profit, according to

BioDefense Corp. shares have not traded publicly, nor has the company been profitable, but its senior officers have been paid more than $4 million.

The SEC also alleges that the company ran boiler room-style operations in order to sell securities to overseas investors. Bergers said that the company hired call center workers to lie to potential investors in an effort to gain their interest.

One investor, according to Bergers, was told that the company had already filled 175 orders for its Mail Defender, a machine used to neutralize anthrax and other pathogens that can be sent through the mail. The investor was also told that the company had orders for thousands more. To date, the company has actually sold fewer than 10 machines, reports.

Michael Lu, BioDefense Corp.'s former chief executive, has also been charged in the case, as were a former senior executive vice president, a former vice president and a consultant.