SEC Targets Imaging3 CEO

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The Securities and Exchange Commission on Wednesday charged medical imaging device developer Imaging3 Inc. and its chief executive with civil fraud.

Dean Janes, chief executive and founder of Burbank-based Imaging3, was accused of misleading investors in a November 2010 conference call about concerns the U.S. Food and Drug Administration had regarding the company’s three-dimensional scanner.

“Shareholders have a right to trust corporate officers to tell them the truth about the business. When CEOs abuse that trust and make misstatements, innocent shareholders are victimized,” said Michele Wein Layne, director of the SEC’s Los Angeles office, in a statement. “The SEC will hold corporate officers accountable for misleading shareholders.”

The scanner had been denied clearance by the FDA three times, but in the Nov. 10 conference call Janes did not discuss any issues stemming from an October 2010 FDA review of the device, according to the SEC. That review found that the device had the potential for overheating and produced “scientifically invalid and useless” images.

Instead, the SEC alleges that Janes said the FDA’s worries were “not substantive” and mostly “administrative,” and that none of their concerns were “safety-related.”

Company shares traded for 25 cents at the time of the Nov. 1 conference call, but have since fallen below a penny. The company filed for bankruptcy last year.

The SEC is seeking to bar Janes from serving as an officer or director of a public company, and to require him and the company to pay civil penalties.

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