Former CytoDyn CEO Nader Pourhassan is being sentenced to federal prison after years of inquiry over his administration of a high-profile drug program.
A federal judge in Maryland sentenced Pourhassan to 30 months in prison on Monday after a jury found him guilty of securities fraud, wire fraud, and insider trading. The court also ordered him to pay more than $5.3 million in reparations and forfeit roughly $4.4 million. The sentencing brings to an end a multi-year case that prosecutors say revolved around misleading statements about the company’s drug program and millions of dollars in illicit stock trades.
In a news release issued on January 26, the United States Attorney’s Office for the District of Maryland explained the penalties, stating that Pourhassan sold about 4.8 million shares and profited by $4.4 million from those trades. Prosecutors accused him of making a series of public statements that, they believe, inflated CytoDyn’s stock price and attracted new investors. The U.S. Attorney’s Office, District of Maryland, has issued an announcement with the official breakdown of the sentence and financial orders.
How Prosecutors Say The Scheme Worked
According to federal court documents and civil allegations brought by securities regulators, Pourhassan frequently misrepresented the progress of CytoDyn’s therapeutic candidate leronlimab toward Food and Drug Administration approval. This included a 2020 release that falsely stated that a completed Biologics License Application had been submitted to the agency.
Regulators and prosecutors saw those declarations as pivotal milestones in CytoDyn’s stock price and attracted new investment. The Securities and Exchange Commission’s civil action and charges can be found at the SEC website.
Co-Defendant’s Case Takes A Different Turn
Pourhassan was prosecuted alongside Kazem Kazempour, the former CEO of Amarex Clinical Research LLC, a contract research company that cooperated with CytoDyn. Kazempour’s lawyers contended that displaying the two defendants together unfairly harmed their client in the eyes of the jurors.
In a Jan. 16 judgment, a federal judge agreed in part, granting Kazempour a new trial and vacating two charges against him due to what the court termed as prejudicial spillover, according to his defense team. Pourhassan’s sentencing is the only major resolution so far, with Kazempour preparing to contest the other allegations in a separate trial. McGuireWoods provides additional information about the post-trial ruling.
Portland-Area Tie And Investor Fallout
Pourhassan, a Lake Oswego resident, oversaw Vancouver-based CytoDyn’s aggressive advertising and fundraising operations, which authorities allege raised over $300 million from investors. Local business observers are now considering what the criminal case and financial fines may signify for those who believed the company’s story.
The Portland Business Journal published regional coverage of the sentencing and its implications for investors. Shareholders and patients who have followed leronlimab’s progress are now waiting to see how restitution, forfeiture, and any appeals play out in court.
What Comes Next
Restitution and forfeiture orders will be processed through federal channels, with any proceeds paid according to court rules for victim compensation. CytoDyn has reported in public papers that company is under investigation by the Department of Justice and the Securities and Exchange Commission, warning that the investigations could have an impact on its finances and operations. For further information, please view the company’s most recent SEC filing.
Pourhassan’s punishment, according to prosecutors, marks the end of a case that demonstrates how executives who profit from public health concerns can face criminal charges.
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