A Long Island man admitted on Monday, Nov. 1 that he scammed investors in a purportedly revolutionary new aspirin out of $3.5 million that he used as his own personal piggy bank.
Donald A. Milne III, a 57-year-old repeat offender from Massapequa, defrauded more than 70 victims from throughout the country who thought they'd invested in Instaprin Pharmaceuticals, which he touted as a “fast-acting form of powdered aspirin that could instantly stop heart attacks and strokes," Acting US Attorney for the District of New Jersey Rachael A. Honig said.
He used the money instead for a Caribbean vacation, boating expenses, divorce payments, clothing, and spa treatments -- and to sustain and operate Island Raceway & Hobby Inc., a now-defunct remote-controlled toy race car business in Lindenhurst, she said.
A much smaller portion of the money went toward paying other investors in a “Ponzi-scheme fashion,” Honig said.
Milne – who’d pleaded guilty to investment fraud charges in a previous case more than 20 years ago -- told the investors this time that their money was being used to cover “normal day-to-day operating expenses” of Instaprin, as well as “the costs involved in developing and commercializing its products,” the U.S. attorney said.
It wasn't, she said.
Milne also lied when he told the victims that he’d assembled a “very strong world-renowned board of directors and medical advisory board” that included industry leaders in fields of science and finance, Honig said.
The “false and misleading” assertions didn’t end there, she said.
Honig said that Milne -- the founder, president, and chief executive officer of Instaprin -- also told investors that Instaprin:
- had been approved by the U.S. Food and Drug Administration (FDA); as nearing a product launch and public stock offering;
- had contracted with a New Jersey research company for an FDA-approved clinical trial;
- was in negotiations with large pharmaceutical corporations for “imminent” joint busines ventures.
The Securities and Exchange Commission filed a civil complaint against Milne and Instaprin in US District Court in New Jersey in May 2019.
The complaint says that Milne “portrayed himself as an experienced professional in the pharmaceutical industry who was on the cusp of turning his investors’ investments into riches,” when he was, in fact, “a convicted felon who preyed on and defrauded unsuspecting investors.”
Milne already had a history: He was sentenced to probation in 2000 after admitting that he took bribes as a New York boiler-room broker in another securities scam, records show.
Milne resolved the recent complaint by agreeing to final judgments “permanently enjoining (him) and Instaprin from violating the charged provisions of the federal securities laws, ordering full disgorgement, prejudgment interest, and civil penalties,” Honig said.
Rather than face criminal prosecution, he took a deal from the government, pleading guilty Monday to securities fraud via video conference.
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