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Founder of Medford biotech convicted of defrauding investors of $12.7m

Frank Reynolds (left, shown at a 2018 legal proceeding) claimed to have conquered the paralysis that afflicted him after a 1992 car accident — a claim prosecutors called false.Pat Greenhouse/Globe Staff/File 2018/Globe Staff

Francis Reynolds, the founder of a Medford biotech who said he entered the field after overcoming an injury that supposedly left him paralyzed, was convicted Monday of defrauding investors of about $12.7 million.

On the second day of deliberations, a US District Court jury in Boston convicted Reynolds, the founder of PixarBio Corp., of one count of securities fraud and three counts of obstruction of an agency proceeding. The latter stems from an investigation by the Securities and Exchange Commission.

The fraud charge is the most serious and carries a maximum prison sentence of 20 years. Reynolds, of Newton, is scheduled to be sentenced on Feb. 6.


Reynolds, 57, a swaggering former biotech executive who spoke at a TEDxBoston talk in 2010 and was named a fellow at the prestigious MIT Sloan School of Management in 2005, never took the stand in the 14-day jury trial. He declined to talk to reporters after the verdict.

He and two associates were accused of engaging in manipulative trades of PixarBio’s stock in December 2016 to inflate its price and trading volume. Federal authorities said the scheme defrauded more than 200 people who had invested about $12.7 million in PixarBio, which Reynolds started in 2013.

Both of the associates, Kenneth Stromsland, PixarBio’s vice president of investor relations, and M. Jay Herod, a longtime friend of Reynolds, had previously pleaded guilty to federal charges and testified at the trial.

PixarBio was supposed to be developing a non-opioid pain reliever that Reynolds predicted would end “thousands of year of morphine and opiate addiction.”

In fact, prosecutors said, he lured investors with false claims from the start. He told them that the Food and Drug Administration had accelerated the approval process for PixarBio’s experimental painkiller, called NeuroRelease, and that PixarBio had a market value of $1 billion. He told them the startup was poised to start clinical trials in humans, and that Reynolds had personally invented a medical device to treat spinal cord injuries. He also said he was listed as a co-inventor on more than 50 neurological patents.


None of it was true, say federal authorities, who assert that Reynolds had no formal neuroscience training and isn’t identified as a co-inventor on any issued patents.

Plenty of biotech CEOs have compelling sales pitches, but Frank Reynolds had an extraordinary one. He said he hadn’t planned a career in biotechnology — his calling found him.

After a 1992 car accident left him paralyzed for eight days and bedridden for five years, he said, he was so moved by “Lorenzo’s Oil,” a film about an effort to cure a rare affliction, that he set out to conquer his own. He learned everything he could about spinal cord injuries and, incredibly, got himself walking again.

At his TEDxBoston talk — when he was heading another biotech, Cambridge-based InVivo Therapeutics — he told the audience he wanted to draw on the lessons of his hard road back and help others. He planned to bring a medical device to market that might overcome the devastation of paralysis. But during the federal trial in Boston, the government presented evidence that Reynolds was never paralyzed or injured in a car accident in Philadelphia in 1992, as he had claimed.

An attorney questioned by Assistant US Attorney Sara Miron Bloom testified that he represented Reynolds in a medical malpractice lawsuit for injuries suffered in a spinal surgery.


The medical malpractice lawyer, Joseph Messa Jr., told the jury that Reynolds won $750,000 in the lawsuit, but the claim never alleged his client was paralyzed. Messa also disputed that Reynolds lay in bed for five years.

“I don’t recall him being bedridden for that kind of period of time,” Messa said.

Jonathan Saltzman can be reached at jsaltzman@globe.com.