Former PixarBio worker pleads guilty in fraud case

A former PixarBio (OTC:PXRB) employee pleaded guilty last Friday to charges of fraud and obstruction, according to a recent report from the Boston Business Journal.

The employee, Jay Herod, was accused of making false statements to the SEC and impeding their investigation, as well as manipulating company stock trades and misleading investors, according to the report.

Herod joins former investor relations VP Kenneth Stromsland, who pleaded guilty to defrauding investors and lying to federal investigators, according to the Boston Business Journal.

CEO Frank Reynolds, who faces similar allegations, told the Business Journal yesterday that he was unaware of the fraud and that he is continuing to work on bringing PixarBio’s non-opioid painkiller to the market.

Reynolds, Herod and Stromsland face accusations of fraudulently raising approximately $12.7 million to fund development of NeuroRelease, according to the report.

PixarBio is purportedly developing a drug to replace morphine and other opiates, but prosecutors alleged that the product is actually an older anti-convulsant called carbamazepine, sold under the trade name Tegretol, that’s used to treat epilepsy and neuralgia; PixarBio plans to re-formulate the drug as a time-release injection called NeuroRelease.

That didn’t stop Reynolds from touting NeuroRelease to investors as the end to “thousands of years of morphine and opiate addiction,” the feds alleged, citing a December 2015 Reynolds email to investors. In that email the former InVivo Therapeutics (NSDQ:NVIV) chief executive pledged “a HUGE return on investment (ROI) for any investors in PixarBio’s NeuroRelease.”

Last April, federal authorities arrested Reynolds and his associates over the securities fraud charges.

Theranos whistleblower Tyler Shultz to participate in keynote interview at DeviceTalks Boston At DeviceTalks Boston, Tyler Shultz will give attendees an inside look at Theranos and how he was able to sound the alarm after he realized the company was falling apart. Shultz will take attendees behind the story that everyone is talking about: the rise and fall of Elizabeth Holmes and her diagnostic company, Theranos. Join Shultz and 1,000+ medical device professionals at the 8th annual DeviceTalks Boston. REGISTER NOW