A California medical device consultant convinced 160 acquaintances that he had stock to sell in a company developing ways to transport therapies past the brain's blood-brain barrier--but Greg Ruehle was engaging in fraud, according to federal prosecutors and the SEC.

Qmed Staff

Medtech consultant Greg Ruehle (64) has pleaded guilty in federal court in Southern California to bilking 160 people out of nearly $2 million by selling them "stock" in ICB International, even though he was no longer associated with the young, La Jolla, CA-based company,

Ruehle, 64, of Oceanside, CA., has agreed to pay restitution under his plea agreement. The charges he pleaded guilty to last week included securities fraud, which carries a maximum 20-year prison sentence and $5 million fine. Ruehle also pleaded guilty to possessing two stolen semi-automatic pistols and a revolver that law enforcement discovered in his possession. The stolen firearms charge carries a maximum 10-year prison sentence and $250,000 fine.

The U.S. Securities and Exchange Commission has started its own civil charges against Ruehle.

The complaint, which paints Ruehle's scheme as "straightforward," states that Ruehle sold bogus securities to "unsophisticated investors," mostly around Southern California and his hometown in Minnesota. It notes that he fabricated documents including bogus stock certificates and a forged letter from the issuer's CEO to convince investors that the securities were genuine. Ruehle reportedly used the proceeds, in part, to cover gambling debts and the purchase of a car.

The fraud took place as early as 2012, when ICBI used Ruehle as a consultant, and ran until about 2015, according to the complaint. Ruehle issued a letter to investors that said, in part, that he had transferred shares to the investors and that the shares would be noted in the company's corporate minutes. The letter appears to bear by the signature of ICBI's CEO, Ram Bhatt, but the forged name was misspelled as "Blatt." Bhatt himself had been unaware of the letter, according to the complaint.

"His actions are not only despicable but he also delayed the development of what could have been a potential diagnostic test and disease altering therapy for Parkinson's disease and other neurodegenerative disorders," Bhatt told Bloomberg BNA.

"Business professionals who use their knowledge of industries and securities to prey on unsuspecting lay investors undermine the public's confidence and ability to participate in the markets," Laura E. Duffy, the U.S. attorney for Southern California, said in a news release.  "As this case demonstrates, they also jeopardize innovation and the success of small businesses.  This type of egregious securities fraud is simply unacceptable."

"Mr. Ruehle engaged in a pattern of lies and deceitful acts while violating the trust of family, friends, and associates," said FBI agent Eric Birnbaum. 

The company at the heart of the case, ICBI, started in 2008 and has fewer than 10 employees, according to its LinkedIn page. The company on its website states that it has developed a proprietary technology which enables noninvasive diagnoses and targeted treatment of both neuro-degenerative diseases and multiple cancers.

According to its website, the company is developing "SMART Molecules" to treat cancer and age-related macular degeneration at the cellular level.

Ruehle's sentencing is scheduled for May 2.

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