The U.S. Securities and Exchange Commission (SEC) says it has brought charges against medical scanner manufacturer Imaging 3 Inc., for allegedly misleading investors and shareholders about the details of a Food and Drug Administration’s ruling on one of its product.
The SEC in a statement said it filed the fraud charges against both the company and CEO Dean Janes, who allegedly misled investors by not admitting to analysts during a conference call that the FDA had rejected the Imaging3 device because of the “potential for over-heating, and the fact that some sample images the company submitted were ‘scientifically invalid and useless’ ”.
Imaging 3 makes medical imaging devices and is a distributor of other medical equipment, including pain “management tables, surgery tables, urology tables and vascular tables,” it said in a presentation on its site. The company was founded as a medical services providers in 1993 and it has recently been actively promoting its 3D imaging device, which reportedly “produces 3D medical diagnostic images of virtually any part of the human body.”
In May, Imaging 3 said it received approval to go ahead with a Chapter 11 Bankruptcy Reorganization plan. In a statement announcing the bankruptcy proceeding CEO Janes said the company had a “good deal of work ahead of us towards becoming a fully reporting public company as well as working towards submitting our 510k application with the FDA.”
The SEC is, however, asking the court to bar Janes “from serving as a public company officer or director” and wants the company to pay penalties. Its action followed the third denial of approval for Imaging 3’s proprietary scanner by the FDA. Following the FDA’s action, Janes allegedly denied the regulator raised questions about the technology behind the device and used “his personal Facebook page in another effort to mischaracterize the denial.”
“Shareholders have a right to trust corporate officers to tell them the truth about the business,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office in the regulator’s statement.