Intellect Neurosciences Inc. (fka ILNS)

[montanus]

David Blech, 56, his head cast downward, pleaded guilty to two counts of securities fraud in U.S. District Court in Manhattan, agreeing not to challenge any sentence he may receive that isn't longer than four years and three months in prison.

The plea came 14 years after he was sentenced to probation for actions he took in response to a large decline in the value of biotechnology stocks in the spring of 1994. His footprint on the universe of biotechnology securities at the time was so large that at least a dozen stocks that his defunct company, D. Blech and Co., had underwritten lost nearly a quarter of their value when his company abruptly closed its doors on Sept. 22, 1994, a day known on Wall Street as "Blech Thursday."

On Wednesday, the Manhattan resident told a magistrate judge that he saw his investments sour again after he invested more than $1 million in late 2006 in a biotech company, Pluristem Therapeutics Inc.

"I was so fascinated with Pluristem and was so convinced that it would be a success that I actually borrowed much of the money I used to help my friends and family to buy Pluristem stock," he said. "By May of 2007, I was heavily in debt, and my financial obligations to my family and to others who had loaned me funds were overwhelming."

He said he began selling much of his stock to pay debts but also bought shares through accounts in the names of family and friends so that he wouldn't damage the value of the company's stock.

"The court should know, however, that I did not make any money on my investment in Pluristem. In fact, I lost several million dollars on my investment in Pluristem over time," he said.

He said he had a similar experience with his investment from 2005 to early 2008 in Intellect Neurosciences Inc. He said he "was desperate for money" in early 2008 and began selling Intellect stock to raise money while he was purchasing the company's shares through accounts in friends' and relatives' names.

"I knew what I was doing was wrong and violated the securities laws," he said.

William Prather, a spokesman for Pluristem, said the company had no immediate comment.

Daniel G. Chain, CEO and chairman of Intellect, said he was disappointed to hear about Blech's plea. "We had no inkling of what was going on as far as manipulating the stock at the time," he said.

Chain called Blech a "true supporter of the company" and said Blech's wife owns more than half of the company's shares, though neither she nor he has any decision-making role and doesn't sit on the board of the New York-based biopharmaceutical company, which works to discover and develop therapeutic drugs to slow, stop or prevent Alzheimer's disease and other serious neurological disorders.


http://finance.yahoo.com/news/ny-man-admits-illegally-trading-230717188.html