Southern California -- this just in

« Previous Post | L.A. NOW Home | Next Post »

Former San Diego biotech executive pleads guilty to lying to pump up stock price

June 3, 2010 | 10:29 am

A former executive for a San Diego biotech firm admitted in federal court that she was part of a conspiracy to pump up the company's stock price by lying about how close it was to developing a genetic screening test for Down syndrome.

Elizabeth Dragon, former senior vice president for research and development at Sequenom Inc., pleaded guilty Wednesday to a single count of conspiracy to commit securities fraud.

In exchange for the plea, prosecutors agreed not to file additional charges. Dragon agreed to help prosecutors in related cases.

Dragon gave false information to investors and analysts at meetings in Vancouver, Canada; New York, and San Diego in 2008 and 2009, according to court documents. Stock prices zoomed from $8 per share to $25 per share in 18 months.

When the firm admitted it was not close to developing the test, the stock plunged and investors lost $400 million, according to court documents.

Dragon received $238,000 in salary and $35,982 in bonuses in her final year at the company. She is set to be sentenced Aug. 30.

Prosecutors agreed not to seek prison time for Dragon, although the decision about sentencing is up to the judge. The charges carry a maximum of 25 years in prison.

The criminal case was brought by the U.S. attorney's office and the Securities Exchange Commission.

-- Tony Perry in San Diego