The founder of Irvine's Biomedcare Inc. has been accused by the Securities and Exchange Commission of selling nearly $2 million in unregistered securities in a company he previously operated to immigrant Vietnamese investors.
Lloyd Tran, inventor of an intravenous medical device, also allegedly made fraudulent claims and provided incomplete information to investors about Controlled Release Technologies, a company he founded in Chicago in 1984 and moved to Irvine in 1989, according to the SEC complaint filed Thursday in Chicago.
CRT, which manufactured the Micros drug-delivery system, was forced into involuntary bankruptcy in 1990. Biomedcare, which Tran also founded in 1990, is developing a new version of Micros.
Between February, 1989, and March, 1990, the SEC alleges, Tran sold about $2 million in unregistered common stock in CRT to more than 100 investors in Illinois, California--many of them residents of Little Saigon in Orange County--Washington and Oregon, without telling them of the company's precarious financial condition.
Also, according to the complaint, Tran claimed that his product had full Food and Drug Administration approval, when it did not. The FDA had warned Tran not to make such representations to potential investors.
Tran, who said he not yet seen a copy of the complaint, denied the allegations Friday. He said the company's bankruptcy was brought on by disgruntled employees in Chicago who opposed the move to Irvine, and he assumed that the allegations stemmed from their complaints.
"CRT was a private company, not public," said Tran, who is also a Vietnamese immigrant. "I only sold (stock) among friends and friends of friends."
Tran said he hopes Biomedcare can generate enough profits to reimburse some of the investors who lost money.
"Maybe we can settle this," Tran said about the allegations. "My goal, if it's successful, is to return those back investments."
Alice Holloway, an SEC attorney in Chicago, said Tran faces no penalty from the civil complaint. The agency is simply seeking an injunction ordering Tran not to engage in similar securities practices.