SEC charges ex-CEO of medical device company with fraud, says some devices were ‘just a piece of plastic’

The headquarters of the U.S. Securities and Exchange Commission (SEC) is seen in Washington, D.C., May 12, 2021.

Andrew Kelly | Reuters

Laura Tyler Perryman, co-founder and former CEO of the medical device startup Stimwave Technologies, was charged with allegedly defrauding investors out of $41 million by making “false and misleading” statements about one of its devices, according to a complaint filed with the U.S. Securities and Exchange Commission Tuesday.

The complaint alleges that Perryman misrepresented a Stimwave device that was supposedly able to treat chronic nerve pain by using electrical signals. The device is made up of a transmitter, an electrode array and a receiver, which was “in reality, fake and nothing more than a piece of plastic,” according to the SEC. The fake and non-functional component was allegedly implanted into patients’ bodies, the complaint said.

Perryman also allegedly told investors that the device, called the peripheral nerve stimulation (PNS) device, was “the only effective device of its kind on the market” and had been approved by the U.S. Food and Drug Administration, according to the SEC.

“We allege that Perryman touted a supposedly innovative medical pain-relief device while concealing that a primary component of the device was fake and that patients were unwittingly undergoing unnecessary surgeries to implant the non-functional component into their bodies,” Monique C. Winkler, director of the SEC’s San Francisco regional office, said in a release.

The complaint charges Perryman with violating the antifraud provisions of federal securities laws. The SEC is seeking permanent injunctions, a civil penalty, disgorgement plus prejudgment interest and an officer and director bar, according to the filing.

Perryman did not comment and directed CNBC to her lawyer, who did not immediately respond.

The SEC’s complaint follows Perryman’s indictment by the U.S. Attorney’s Office for the Southern District of New York in March. She was arrested in Delray Beach, Florida, and charged with one count of conspiracy to commit wire fraud and health care fraud, and one count of health care fraud, according to a release.

The SDNY on Tuesday filed a superseding indictment against Perryman that added criminal securities fraud charges, the SEC said.

Stimwave filed for voluntary Chapter 11 bankruptcy protection in June 2022. Curonix, a peripheral nerve stimulation company, acquired Stimwave’s assets late last year. Stimwave voluntarily recalled the PNS devices, but Curonix still offers a PNS system called Freedom PNS, according to the Curonix website.

Representatives for Curonix did not immediately respond to CNBC’s requests for comment.

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