Former Sequenom executive admits to false information in press releases
A former executive at Sequenom Inc. pleaded guilty Wednesday to conspiracy to defraud shareholders by disseminating false and misleading information about a Down syndrome screening test under development at the San Diego biotechnology company. The company is located on Torrey Pines Mesa.
Elizabeth A. Dragon, a former senior vice president for research and development at Sequenom, admitted that she and others caused the company to issue news releases and statements to investors and others, falsely stating the Down syndrome test had been evaluated in “blinded” studies — that is, that the scientists conducting the tests did not know the actual outcomes, according to prosecutors.
In fact, as Dragon admitted, the tests were not “blinded” because scientists either knew the outcomes before testing the samples or had been directed to change their initial results so the final results matched the true outcomes, prosecutors said.
Dragon also admitted that she and others caused Sequenom to falsely claim that the test’s reliability and accuracy were nearly perfect, according to the U.S. Attorney’s Office.
Prosecutors said Dragon admitted that the false and misleading statements were designed to inflate and sustain the price of Sequenom stock.
On April 29, 2009, after the close of the market, Sequenom announced a substantial delay in the commercial release of the Down syndrome test and an internal investigation due to “employee mishandling of R&D test data and results.” The next day, Sequenom’s stock price dropped by more than 75 percent, prosecutors said.
Dragon is scheduled to be sentenced Aug. 30 by U.S. District Judge William Q. Hayes.