By Reenat Sinay

Law360 (May 14, 2020, 11:01 AM EDT ) The U.S. Securities and Exchange Commission took aim at two unrelated companies that purported to offer products to combat COVID-19, accusing them of defrauding the public and artificially inflating their share prices in separate enforcement actions filed Wednesday and Thursday.

The SEC's suit against digital marketing company Turbo Global Partners Inc. in Florida federal court claims that Turbo touted a "public-private partnership" with government entities in which it would be the exclusive distributor of thermal scanning equipment designed to detect fevers, one of the early warning signs of coronavirus infection. But no such agreement existed with either the government or the product's manufacturer, according to the complaint.

In a separate suit filed Wednesday in New York federal court, the regulator alleged that biotechnology company Applied BioSciences Corp. issued a series of misleading press releases claiming that it had begun offering home COVID-19 testing kits to the general public for private use. In reality, the finger-prick tests had not yet been shipped, were not meant to be used at home as advertised, and were not approved by the U.S. Food and Drug Administration, the SEC said.

"We are actively monitoring the markets to detect potential fraudsters who seek to use the COVID-19 crisis as a basis for investment scams," Stephanie Avakian, co-director of the SEC's Division of Enforcement, said in a statement Thursday. "As alleged in these complaints, Applied BioSciences and Turbo Global sought to take advantage of the COVID-19 crisis by misleading investors about their ability to provide solutions."

Turbo Global, whose main business consists of advertising revenue from video monitors placed in pharmacies around the country, told the public that it had formed a "strategic alliance" with a tech company called BeMotion, the regulator said.

As the novel coronavirus pandemic swept the globe, Turbo Global and its CEO Robert W. Singerman were in talks with BeMotion to be the exclusive U.S. distributor for thermal scanning equipment BeMotion had developed in China, but no agreement was ever finalized, according to the suit.

In a March press release, Turbo Global falsely said that it was the authorized U.S. selling agent for the fever scanning equipment, and that the product was the "only scanning technology on the planet with noncontact intelligent human temperature screening and facial recognition," the regulator alleged.

While the thermal scanning product had facial identification technology — meaning it could tell a human face apart from an inanimate object — it did not contain facial recognition technology, or the ability to differentiate between two human faces, and is not the only system to contain facial identification technology, the SEC said.

A second press release in April touted Singerman's communication with the governors of all 50 states about the new equipment, as well as major retailers like Target and Walmart. But that "confirmed" contact was misleading and consisted only of unsolicited emails and faxes, according to the SEC.

The regulator says that the false statements in the two Turbo Global press releases "materially impacted" the company's share prices in violation of federal securities fraud laws.

Additionally, Singerman is a "recidivist securities violator" who was previously targeted by the SEC in 1999 over the fraudulent sale of securities relating to a boiler room network, the agency said.

In its suit against Applied BioSciences, the SEC accused the biotech company of "seeking to exploit the COVID-19 pandemic for profit" by "dramatically" shifting its focus from cannabinoid therapeutic products to coronavirus-related products in March.

The company announced to the public that it would begin developing a range of products to fight COVID-19, including hand sanitizer and home testing kits for private use, causing its share prices to soar by as much as 80% in the span of a day, according to the regulator.

"In fact, [Applied BioSciences] had simply entered into an agreement to purchase test kits from the Essential Oil Company, a company that prior to the COVID-19 pandemic sold 'vitamin essential oil aromatherapy diffuser sticks[,]' and whose sole officer has a background in acting and modeling," the SEC said.

Later press releases in April announced that Applied BioSciences had ended its relationship with Essential Oil and backtracked on its advertisement that anybody, with or without medical training, could use the test kits at home, but still failed to acknowledge that the kits were never approved for home use by the FDA to begin with, according to the SEC.

The SEC is seeking civil monetary penalties against both companies and an officer ban against Singerman, among other remedies, court records show.

Representatives for the defendants did not immediately respond Thursday to requests for comment.

The SEC is represented in-house by Robert F. Schroeder, William P. Hicks and Madison Graham Loomis in the Turbo Global case, and by Dugan W. E. Bliss, Lara S. Mehraban Thomas P. Smith Jr. and Kristine M. Zaleskas in the Applied BioSciences case.

Turbo Global is represented by Kimberly P. Stein of Flangas Law Group.

Applied BioSciences is represented by Thomas E. Puzzo of the Law Offices of Thomas E. Puzzo PLLC.

The cases are SEC v. Turbo Global Partners Inc. et al., case number 8:20-cv-01120, in the U.S. District Court for the Middle District of Florida, and SEC v. Applied BioSciences Corp., case number 1:20-cv-03729, in the U.S. District Court for the Southern District of New York.

--Editing by Rebecca Flanagan.

Update: This article has been updated to include additional details from the complaints and counsel information.

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