An Investment Fund Fraud Based on A Claimed Treatment for HIV/AIDS

An Investment Fund Fraud Based on A Claimed Treatment for HIV/AIDS

For almost six years Michael Harris solicited investments in M.F. Harris Research, Inc. Eighty investors put up thousands of dollars for what they understood was a possible treatment for HIV/AIDS. The investment was a fraud. Yesterday a jury convicted Mr. Harris of securities, mail and wire fraud on proof that in fact he was running an investment fund fraud. U.S. v. Harris, Case No. 3:12-cr-00170 (E.D. Va. Verdict March 4, 2013.

Harris Research was formed in 2003 supposedly to develop a treatment HIV/AIDS. Mr. Harris claimed to have discovered that hyperbaric chambers used to treat divers for the bends inhibited the HIV/AIDS virus. He claimed Harris Research was pursuing a potential treatment regimen for the virus using the chamber.

Beginning in 2005 Mr. Harris and his company solicited investors to develop the treatment. Those investors were told that:

Patents: Harris Research was obtaining patents in the U.S. and abroad for its treatment;

Human trials: That the company was conducting human trials or assisting with human trials using the treatment;

Continuing research: Harris Research was engaged in continuing research; and

Treatment: The company was developing a treatment.

Many investors were requested to put up only $1 on the promise that the company would increase in value 10 to 20 fold. In some instances investors were told funds were urgently needed because of patent deadlines.

In fact the evidence at trial demonstrated that Mr. Harris' claims were false. The investment fund was a fraud. Investors were not told the actual financial condition of the company or the use being made of their funds. Most of the $880,000 in investor funds was misappropriated by Mr. Harris and used for his personal benefit.

The date for sentencing has not been set.

For more commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

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