The Deseret News reported that Stem Genetics of Utah was merely a scam for money.
Three men, two of them former Utahns, have been charged in federal court with fraud after authorities say it was discovered they organized and operated an overseas investment scheme involving a scam stem-cell research facility in Utah.
In conjunction, the men are believed to have bilked more than 600 investors out of approximately $6.6 million, according to a statement from the U.S. attorney's office.
Allen Z. Wolfson, 60; his son David M. Wolfson, 26; and Michael S. Newman, 45, were all charged with nine counts of wire fraud while scheming to defraud investors. Allen Wolfson currently resides in New York and is facing fraud charges there as well. It is unknown where his son is, and Newman is believed to be serving a prison term in Laos.
The charges carry a maximum sentence of 30 years in prison for each count.
The Securities and Exchange Commission is investigating the case with the FBI. About five years ago, Newman and Allen Wolfson were allegedly looking for a stem-cell research company in the United States with which to associate and solicit investments from overseas investors, primarily from the United Kingdom, Australia and New Zealand. When they were unsuccessful, they organized their own company in 2002, called Stem Genetics Inc. and opened an office in Salt Lake City at 3809 S. West Temple.
Stem Genetics hired various professionals to act as interim presidents and carry out duties as ordered. According to court documents, the employees met with other doctors to discuss stem-cell research but no research was ever performed by Stem Genetics and no research facility was ever actually set up.
The company used a Virgin Islands-based corporation to make cold calls to potential investors using high-pressure sales tactics, as stated in court documents. The documents say the men made false claims concerning Stem Genetics, telling investors the company was performing "promising re- search" and funds were to be wired to various escrow accounts in Utah and Arizona, which were not divulged to the federal government.
By limiting the sale of stock to international investors, the defendants were exempt under federal securities law from registering Stem Genetics stock with the SEC.
Stem Genetics business license expired in 2004 and was not renewed.
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