David Johnston CFO – Fraudster, Misleading Investors

David Johnston CFO used to be the chief financial officer of ImmunoGen. However, he had to step down from that position when the SEC found him guilty of fraud and misleading investors. 

SEC attorney, Eric Fornii even compared David Johnston CFO to a shady used car salesman. The attorney pointed out that he had schemes to defraud biotech investors by telling them that the FDA had many positive things to say about tivo. 

While he noted that FDA had some concerns, it was similar to a salesman telling a customer that the engine might make a few noises while leaving out the part about needing an entirely new engine. 

The jury found David Johnston CFO liable for securities fraud. 

According to the SEC, he had played a significant role in misleading investors. He tried to push the line that tivo was heading into the market. However, he didn’t tell them about the many issues the Richard Pazdur’s group at the FDA had regarding their trial design. 

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Also, the FDA had issues with how tivo was described to investors. 

Clearly, David Johnston CFO didn’t care about all that. When the media reached out to ImmunoGen (his employer at the time), they said the case is not related to them so they can’t comment.

david johnston cfo
(Source)

While they kept him as the chief financial officer for the rest of that year, David Johnston CFO resigned. 

It was a civil proceeding after all. Recently, the FDA has expressed concerns about how several biotechs tend to mislead investors while describing their dealings with the agency. 

SEC has even raised this subject by issuing a public warning to biopharma. However, the FDA is bound by law to stay silent. 

More Details on the Case Against David Johnston: 

Aveo, the company for which David made misleading claims, has a rocky history. The company faced a lot of backlash from the regulators when the company pushed for an approval of tivo in 2013 even though a study showed a 25% fatality risk. 

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When that happened, the company’s stock prices plummeted. For the subsequent years, David Johnston CFO and his colleagues tried to mitigate teh negative impact of FDA’s statements. 

Eventually, the company entered into a settlement agreement with the SEC. They would pay $4 million after an $18 settlement with shareholders. 

david johnston cfo
(Source)

Aveo’s shareholders had sued the company for failing to disclose the concerns FDA had raised. 

Where is David Johnston CFO Now? 

According to his online profiles and latest updates, David Johnston CFO has launched DBJ Consulting. 

His current title is – Biotechnology Financial Executive and Fractional CFO. 

He served at ImmunoGen, Inc for 9 years and he had to leave that firm after he was found guilty of fraud. 

Before that, he was at Aveo as their CFO for 6 years. 

David Johnston CFO has an MBA from University of Michigan – Stephen M. Ross School of Business and a Bachelor of Science in Commerce from Washington & Lee University. 

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Conclusion

There are plenty of fraudsters in the biotech industry. Investors and professionals need to be extremely careful who they deal with in this sector. 

For example, Dr Leen Kawas is another top-level biotech executive who was found guilty of lying in her research papers. Although her company tried its best to cover up the whole story, it had to sever ties with her eventually. 

Still, she didn’t lose any of her shares in the firm and earns dividends for lying in her research papers. 

The case of David Johnston CFO is similar. He lied to investors about what the FDA said about his company’s product. 

The only party which suffered losses in this deal were the investors. They were misguided and misled. 

Beware of fraudsters like David.

2.7Expert Score
Trust
2.1
Experience
3.4
Professionalism
2.4
Ethics
2.7
1.3User's score
Trust
1.1
Experience
1.3
Professionalism
1.5
Ethics
1.3
PROS
  • None
CONS
  • Fraud
  • Unreliable
  • Misled investors
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8 Comments
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  1. This man is freed from the court without any sentence regarding his imprisonment. This is not the only case where fraudsters like Johnston aren’t even provided with the required punishment according to the crimes they commit.

  2. Can’t believe this guy was allowed to walk off like that when being guilty of defrauding all of his investors. Just goes to show how horrible the entire justice system is.

  3. Reply
    Arrest David Johnston
    December 21, 2022 at 9:35 am
    0.6
    Trust
    10
    Experience
    20
    Professionalism
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    Ethics
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    ImmunoGen was left ashamed because of the frauds which Johnson committed over there, now next scams will take place through Biotechnology firms, and there should be some warnings issued from the government against this scammer.

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  4. 0.5
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    Ethics
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    These scammers are getting attention because of the degrees they hold from famous Universities, taking the example of David who passed his MBA from The University of Michigan, and learned his concepts for the development of the related sector but now they are misusing their knowledge for filling their pockets after scamming thousands of their investors.

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  5. 1
    Trust
    20
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    20
    Professionalism
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    Ethics
    20

    I can’t understand how someone can be freed after committing fraud related to the biotech industry, this shows how justice is working, and the most shocking thing is that even many fraudsters aren’t placed in the courts for trials. There must be special changes for scammers like Johnston.

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  6. 0.75
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    10
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    20
    Ethics
    20

    There were many fraudsters found fooling investors about their research and were charged with lying in their research papers, which shows the carelessness of these scammers regarding the health of the people. Then you have this man who was legit caught lying about cancer medicine.

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  7. 0.6
    Trust
    10
    Experience
    10
    Professionalism
    20
    Ethics
    10

    When it comes to investing in the Biotech industry investors need to beware of these scammers like Johnston as they will sue you for their profit. I think it is your responsibility to investigate the future of these so-called frauds. Why would companies assign him the role of CFO again? Stop attaching that respectable term to the name of this cheap liar.

    + PROS: none
    - CONS: Lied to investors
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  8. 0.5
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    10
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    Ethics
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    Biotech has a lot of crooks like this. They lie and mislead investors to keep filling their wallets. I’m disappointed to see that David didn’t get any jail sentence. Defrauding investors should have stricter punishments. Otherwise you would keep getting scammers like him making fools out of gullible investors.

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