Ex-Biopure executive falsely told court he had cancer, US alleges

A former executive of a Cambridge-based biotech company lied to a federal judge when he said he was gravely ill from colon cancer - an attempt to dodge a costly federal lawsuit over problems stemming from an experimental synthetic blood product, federal officials said yesterday.

Howard P. Richman, 57, who now lives in Texas, allegedly falsified letters from a doctor and had his lawyers report to a judge that he had less than a 15 percent chance of survival, delaying a lawsuit brought by the US Securities and Exchange Commission against his company, Biopure Corp.

But he never had cancer, authorities said. Richman was indicted yesterday in federal court in Boston on one count of obstruction of justice. He will be summonsed to appear for an arraignment at a yet-to-be-scheduled date.

"Anyone who lies to the SEC and the court must be held accountable," said David Bergers, regional director for the SEC's Boston office.

"The integrity of our process and the judicial process demands complete honesty," he said.

The alleged lies were an apparent attempt to force a settlement in a high-profile case brought by the SEC alleging Richman and other executives of Biopure mislead investors in 2003 by hyping a flagging synthetic blood product called Hemopure.

The US Food and Drug Administration had reported safety concerns with Hemopure, a blood substitute made from cow hemoglobin, citing studies that suggested it caused heart attacks and heart failure in some patients.

The FDA rejected clinical trials because of the safety concerns.

The report was a blow to Biopure, which had spent about a half-billion dollars since its founding in 1984 to bring Hemopure to market.

But the company, and its executives, never told investors, omitting the information from filings with the SEC in 2003. During that year, the company raised more than $35 million from investors.

A 2005 federal lawsuit brought by the SEC alleged the company "gave the false impression the company had received positive news from the FDA."

The suit was part of he SEC crackdown on companies in the burgeoning biotech industry that falsely hyped flagging products

Richman, three other executives, and Biopure were named in the lawsuit.

Richman's lawyer, Thomas E. Dwyer Jr. of Boston, would not comment yesterday.

Last year, Thomas Moore, the former chief executive, agreed to pay a $120,000 settlement. The company settled without paying a fine the year before.

Jane Kober, Biopure's general counsel, and Carl Rausch, its former vice chairman and senior technology officer, each paid $40,000 fines.

Richman was the only person who contested a settlement at that time.

In April 2006, he told federal officials that he was unwilling and unable to pay a fine, according to court records.

Later that year, SEC officials planned to bring the case to trial, but then Richman reported he had cancer, saying his illness prevented him from participating in any pretrial processes, such as giving a deposition.

He allegedly submitted a phony letter from a concocted doctor stating his treatment included surgery and chemotherapy.

In November 2006, his lawyers told the court that the cancer had spread.

US District Court Judge Patti B. Saris granted a request to temporarily relieve Richman from the litigation.

The next year, in July 2007, Richman said that the cancer had worsened and that he had an 8 percent to 15 percent chance of survival.

For a short time, Richman's alleged scheme worked. In July 2007, Saris approved Richman's request to postpone any final judgment, effectively ending the litigation against Richman.

However, the case was quietly reopened in December. By then, Richman had new lawyers who asked that the case be reopened, saying, "changes in factual circumstances necessitate a conference with this court," according to court records.

Federal officials would not say yesterday whether the reopening had anything to do with the investigation into Richman's alleged lies about having cancer.

In August, Richman had reached a settlement with the SEC. He must pay a $150,000 fine and will be permanently barred from serving as an officer or director of any public company. It was the toughest punishment of all those reached in the suit.

Tiana Gorham, a spokeswoman for Biopure, said the company would not comment on the indictment because Richman has not worked there since 2003.

She also would not comment on the initial SEC lawsuit, saying none of the executives involved - except for Kober, the general counsel - still work there.

Gorham said the company is still seeking approval to sell Hemopure in the United States. Currently, its use is allowed only in South Africa.

Milton Valencia can be reached at mvalencia@globe.com.