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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 15061 / September 23, 1996
SECURITIES AND EXCHANGE COMMISSION v. FUTREX, INC., FUTREX
MEDICAL INSTRUMENTATION, INC., AND ROBERT D. ROSENTHAL, Civil
Action No. 96-CV-02192 (D.D.C.)
On September 23, 1996, the Securities and Exchange
Commission filed a fraud action in the United States District
Court for the District of Columbia against Futrex, Inc., Futrex
Medical Instrumentation, Inc. (collectively, "Futrex"), and
Robert D. Rosenthal ("Rosenthal"), Futrex's Chairman of the
Board, Chief Executive Officer, President, and Treasurer. The
Commission's complaint alleges that Futrex and Rosenthal made
materially false and misleading statements in connection with a
$1.85 million private placement ("private placement") of debt
securities in May and August 1994, and a proposed initial public
offering ("IPO") of 1.8 million shares of common stock at an
anticipated price of $10 per share.
The complaint alleges that in connection with both the
private placement and the IPO, Futrex and Rosenthal stated
falsely that Futrex's hand-held "Dream Beam" analyzer could
measure and accurately predict a person's blood glucose level by
passing infrared light through a finger. However, neither the
Dream Beam nor any other infrared blood glucose analyzer tested
by Futrex has ever been capable of predicting blood glucose
levels accurately. The complaint further alleges that not one of
Futrex's top scientific and technical employees has ever reviewed
or analyzed any data that would support claims made by Rosenthal
and Futrex that the blood glucose analyzer, as configured by
Futrex, actually works.
The complaint further alleges that Rosenthal selectively
used data from a study Futrex conducted in 1991 at Mount Sinai
Medical Center to make the results of the study appear to show a
high correlation, unsupported by the data, between infrared scans
SNIPPETS:
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. FUTREX, INC., FUTREX MEDICAL INSTRUMENTATION, INC., AND
On September 23, 1996, the Securities and Exchange Commission filed a fraud action in the
The Commission's complaint alleges that Futrex and Rosenthal made materially false and
The complaint alleges that in connection with both the private placement and the IPO, Futrex
neither the Dream Beam nor any other infrared blood glucose analyzer tested by Futrex has
The complaint further alleges that not one of Futrex's top scientific and technical employees
The complaint further alleges that Rosenthal selectively used data from a study Futrex
According to the complaint, the data from the fall 1992 studies was analyzed on a
Futrex failed to disclose the adverse results of the fall 1992 studies in its registration
After the Dream Beam gave a reading, Rosenthal stated that it appeared to be his correct
Before the meetings, however, Rosenthal directed a Futrex employee to program a Dream Beam to
Accordingly, the complaint alleges, the Dream Beam readings Rosenthal demonstrated at
The complaint also seeks an order that Futrex, Inc., pursuant to a plan to be proposed by the
the complaint seeks civil monetary penalties from Rosenthal.
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