A Long Island man had pleaded guilty to stealing $3.5 million from investors in a company to develop a powdered form of aspirin that could instantly stop heart attacks and strokes, and using the cash to pay for holidays, divorce payments and a toy race car track he ran.
Donald A. Milne, III, 57, of Massapequa, New York, admitted Monday to ripping off more than 70 investors in his company Instaprin Pharmaceuticals Inc. through a long-running securities fraud.
In 2019, Milne reached an agreement with the Securities and Exchange Commission to shut Instaprin down and to pay nearly $8 million in fines and restitution. Milne had previously pleaded guilty in 1998 to taking part in a boiler-room scam and was sentenced to three years probation.
Federal prosecutors in New Jersey say Milne founded Instaprin in 2012 with the promise of developing a fast-acting form of aspirin that could halt heart attacks or strokes. Over the next five years, prosecutors say Milne raised $4 million through several unregistered securities offerings.
Milne told investors the money was to be used for testing of the drug, to build manufacturing capabilities and general operating expenses, according to court documents. But he instead used the money to pay for a Caribbean vacation, costs for a boat, divorce payments and to operate Island Raceway & Hobby, a toy race car business that he separately owned.
He also allegedly used some of the money to pay out earlier investors in Ponzi scheme-like payments, investigators said.
Prosecutors also said Milne claimed to have put together an advisory board of well-known leaders in the fields of science and finance, when he had not. He also falsely claimed to have received approvals from the Food and Drug Administration, that the drug was about to launch and that the company was imminently going to go public.
Milne faces up to 20 years in prison and a $5 million fine when he is sentenced on March 24.
A message left with Milne’s attorney wasn’t immediately returned.