SEC ALLEGES BIOPHARMA COMPANY AND OTHERS OF MISLEADING INVESTORS

The following is an excerpt from the SEC website: “Washington, D.C., Aug. 2, 2011 — The Securities and Exchange Commission has charged a California-based biopharmaceutical company, three shareholder companies, and four senior executives for fraudulently misleading investors about the regulatory status of the company’s sole product. Three of the executives were additionally charged with insider trading. The SEC alleges that Immunosyn Corporation misleadingly stated in various public filings from 2006 to 2010 that its controlling shareholder – Argyll Biotechnologies LLC – either planned to commence or had commenced the U.S. regulatory approval process for human clinical trials for SF-1019, a drug derived from goat blood that was intended to treat a variety of ailments. The public filings failed to disclose that the U.S. Food and Drug Administration (FDA) had already twice issued clinical holds on drug applications for SF-1019, prohibiting clinical trials from occurring. The SEC alleges that Immunosyn also misleadingly stated that the regulatory approval process in Europe for human clinical trials for SF-1019 was imminent or underway, when in fact Argyll never submitted an application in Europe to conduct human clinical trials. According to the SEC’s complaint filed in federal court in Chicago on August 1, Immunosyn’s CFO Douglas McClain Jr., Argyll’s Chief Scientific Officer Douglas McClain Sr., and Argyll’s CEO James Miceli engaged in insider trading by raising approximately $20 million from their sale of Immunosyn shares while knowing that misrepresentations were being made about the regulatory status of SF-1019. They sold most of these shares through Argyll and two other shareholders named in the SEC’s enforcement action: Argyll Equities, which McClain Jr. and Miceli jointly owned, and an offshore entity Padmore Holdings Ltd., which McClain Jr., McClain Sr., and Miceli jointly owned. Immunosyn’s CEO Stephen D. Ferrone also is charged by the SEC in the securities fraud scheme. “These executives routinely authorized public filings that told investors a story about the status of the company’s prized drug that was far different from the behind-the-scenes reality,” said Merri Jo Gillette, Regional Director of the SEC’s Chicago Regional Office. “Three of these executives went one step further to illegally profit from their tall tales by selling their company stock and reaping more than $20 million while repeatedly misleading investors about the drug.” For example, according to the SEC’s complaint, McClain Sr. made misstatements about the regulatory approval status of SF-1019 in a video on Immunosyn’s website and in a 2008 presentation in which he sold Immunosyn stock he owned through Padmore to patients at a Texas holistic clinic, some of whom were terminally ill. The SEC alleges that McClain Sr. raised approximately $300,000 from these patients, but never gave them the shares they bought. The SEC’s complaint seeks a final judgment permanently enjoining the defendants from future violations of the antifraud provisions of the federal securities laws, ordering each defendant to disgorge all ill-gotten gains plus prejudgment interest and pay financial penalties, and barring Ferrone, McClain Jr., McClain Sr. and Miceli from serving as an officer or director of a public company. Tracy Lo, Eric Phillips and John Kustusch of the SEC’s Chicago Regional Office conducted the SEC’s investigation. The SEC’s litigation will be handled by Ms. Lo and Mr. Phillips. The SEC acknowledges the assistance of the U.S. Food and Drug Administration.”