Hot Covid-19 test company has ties to offshore boiler rooms

Shares of Co-Diagnostics Inc. (Nasdaq: CODX) have risen tenfold since January, when the company announced it had completed preliminary design work on a new Covid-19 test.

Co-Diagnostics, which has only a modest lab and headquarters building in Salt Lake City, said last month it was capable of producing as many as 50,000 tests a day, at a cost of just $10 per patient.

Although it has not publicized its participation, the company is part of a consortium that won $53 million in controversial no-bid testing contracts from the states of Iowa and Nebraska, as well as a $5 million deal from the state of Utah.

But a Sharesleuth investigation found that Co-Diagnostics has extensive ties to a group that once peddled shares of dubious public companies through boiler room-style brokerages overseas.

In fact, it appears that a newer boiler room sold interests in Co-Diagnostics before it went public. We discovered that MB Financial Advisory AG, which cold-called people in Europe with stock pitches, billed the testing company as an “investment capital client.”

Our investigation also found that three of Co-Diagnostics’ early funders have been the subject of Securities and Exchange Commission actions — one for his alleged role in a pump-and-dump scheme and another for violating touting rules.

In addition, some epidemiologists and public health experts in Utah are now raising questions about the accuracy of Co-Diagnostics’ test kits, or the manner in which the testing is conducted, according to a story in the Salt Lake Tribune.

At Wednesday’s closing price of $12.37 a share, Co-Diagnostics had a market capitalization of almost $340 million, not bad for a company that had less than $300,000 in sales over the past three years, and upwards of $20 million in losses.



Co-Diagnostics’ chief financial officer, Reed L. Benson, previously was vice president and general counsel at Broadcast International Inc. (formerly Nasdaq: BCST). It offered video-communications software and services.

Broadcast International was one of the companies whose shares were marketed to foreign investors by the boiler rooms, some of which were linked to a former Utah stockbroker named Bryant L. Cragun, and one of his close associates, Lynn W. Briggs.

SEC filings show that Broadcast International gave Briggs a consulting contract just before it went public through a reverse merger in 2004. Foreign investors who got burned buying shares from the boiler rooms said Briggs pitched them in person, in Europe and Australia.

Broadcast International terminated Benson in 2008 after learning that Spanish regulators had charged him in a case against one of the boiler rooms that had been selling Broadcast International’s shares.

The regulators said Benson was a director of that firm, Carlton Birtal Financial Advisory SL, when it was selling securities without a proper license. They levied a fine of roughly $360,000 against Benson, Carlton Birtal and a second director.

Benson also played a pivotal role in the creation of another Salt Lake City company called Xvariant Inc. (formerly OTC: XVNT). It marketed video technology that let prospective home buyers take virtual tours of properties.

Its shares were pushed by Carlton Birtal and another boiler room, First Swiss Financial Management AG, which was the subject of regulatory warnings. SEC filings showed that a consulting company formed by Cragun and Briggs got some of Xvariant’s initial shares. The stock peaked at $5 in mid-2002 but was down to 30 cents by the end of 2003.

We found that MB Financial Advisory, which claimed to be based in Switzerland, pitched investments in five businesses connected to Benson between 2013 and 2018.

Xvariant is no longer in business. Neither is Broadcast International.



Until a few months ago, Co-Diagnostics was looking like a bust, too. Its stock was off nearly 80 percent from its July 2017 initial public offering price of $6 a share, and it had been warned twice by the Nasdaq exchange that it was in danger of losing its listing.

Then came the coronavirus pandemic. Co-Diagnostics’ stock went from under $1 in early January to $3 at the start of February – after the announcement of the Covid-19 test — and hit a high of a $21.75 at the end of February.

The company has taken advantage of the increased investor interest by raising more than $19 million, through three share placements. The surge in its share price has produced small fortunes – on paper at least – for company insiders and some funders.

Our investigation found that a firm called Legends Capital Group LLC, which Benson co-owns with Briggs’ son, Jason L. Briggs, was among Co-Diagnostics’ top shareholders when it went public in July 2017.

According to Co-Diagnostics’ most recent proxy filing, in August 2019, that stake totaled a little under 1.3 million shares, or 7 percent of the total then outstanding. The stock would have had a market value of $15.7 million as of April 29..

Another entity called Reagents LLC, controlled by the son of Co-Diagnostics’ chief executive Dwight H. Egan, was listed as holding 1.75 million shares, which would have had a market value of $21.6 million as of Wednesday.

Co-Diagnostics said in its annual financial report last month that two Canadian promoters who had provided it with $3 million in capital in late 2018 and early 2019 converted the remainder of the preferred stock they had received into 2.13 million common shares.

Those shares, issued in February and March, would have had a market value of more than $16 million at the end of last month.

Co-Diagnostics also said that 15 holders of its warrants converted them on a cashless basis in February and March, and got just under 700,000 new shares.

That stock could have been sold for anywhere from $2 million to $8.5 million or more, depending on the timing. The recipients almost certainly included some or all of the funders with SEC actions in their past.

Co-Diagnostics got another boost recently when a group of Utah-based tech businesses created an organization designed to screen people who think they might have Covid-19, get likely candidates tested and also track their movements.

The venture, overseen by a company called Nomi Health, chose Co-Diagnostics as its test supplier. It got its first contract in Utah, then got a much larger deal in Iowa after actor Ashton Kutcher, a native of that state, pitched the group to Gov. Kim Reynolds.

The Iowa contract has sparked a backlash because it was awarded without competitive bidding, and because the site where users can take a coronavirus assessment survey also asked whether they were allergic to hydroxychloroquine.

That drug once was thought to be a promising treatment for Covid-19 but studies have since suggested it has little benefit.

Mark Newman, the founder of Nomi Health, also is on the board of a pharmacy called Meds in Motion. According to a story in the Salt Lake Tribune, it had contracted with the state of Utah for 20,000 does of hydroxychloroquine at a cost of $800,000.

The Nomi Health-led consortium is supposed to conduct 540,000 Covid-19 tests in Iowa over the course of its one-year contract.

Some legislators in Nebraska also complained about the no-bid contract there, which also covers 540,000 tests. They said the process wasn’t transparent enough and that Gov. Pete Ricketts should have considered in-state companies as well.

Co-Diagnostics declined to answer a list of questions we submitted.

Instead, it issued this statement through its public relations and strategic communications firm:

“Co-Diagnostics, Inc. makes every effort to return all press inquiries in a timely manner while remaining focused on the important work of manufacturing and shipping COVID-19 tests to countries around the world and within the United States.  Regarding your inquiries, it is the Company’s policy not to comment on requests for information concerning investors, consultants, customers, or employees.”

(Disclosure: Mark Cuban, owner of LLC, does not have a position in the shares of any company mentioned in this article. Chris Carey, the editor of, does not invest in individual stocks and has no position in any companies mentioned.)

We did not attempt to evaluate the quality or reliability of Co-Diagnostic’s coronavirus test. But according to one master list compiled by an online news site,, it is just one of more than 150 that are commercially available around the world.

Instead, we focused on the unusual share activity at the company.



We found that Co-Diagnostics’ evolution bears certain similarities to that of Broadcast International and Xvariant. Before going public, all three companies reported that they raised much of their capital through share sales to entities in the Turks and Caicos Islands, a jurisdiction with no income or capital gains taxes and favorable secrecy laws.

Although the No. 1 investors in those three companies used different corporate names, they all used the same address, a postal box that doubles as the business address for a lawyer named Hugh O’Neill. We found that while each of them originally was listed as controlling 20 percent or more of their respective companies’ common stock, two of them quickly and inexplicably vanished from the ownership tables in SEC filings, with no reports of any share sales, distributions or other events that would explain that.

Under U.S. securities law, individuals or funds that owning 5 percent or more of a company’s common stock must disclose that, and also must disclose changes in their positions.

Our investigation also found that:

– At the time Co-Diagnostics went public, Benson was still in business with Lynn Briggs. Benson was a director and significant shareholder of Inception Mining Inc. (OTC: IMII), a Utah company that acquired a gold mining operation in Honduras in late 2015. SEC filings show that Benson had been president of the acquired company. Inception Mining’s other shareholders after the deal included Legends Capital; Lynn Briggs; his wife, Debbie Briggs; and an entity called Calico Ltd. That Turks and Caicos company was the biggest  shareholder of Xvariant, and also showed up in Broadcast International’s SEC filings.

– The top initial shareholder of Co-Diagnostics at the time it filed the registration statement for its initial public offering was a Turks and Caicos entity called Co-Diagnostics Ltd. SEC filings said O’Neill was the beneficial owner of what was to become 2.34 million shares in the newly public company. SEC filings said O’Neill also was the owner of millions of Xvariant shares issued to Calico Ltd.. We found that O’Neill previously was the signatory for other entities that were implicated in fraud cases. For instance, SEC filings show that he signed documents on behalf of Blue Marble Investments Ltd. and Kentan Ltd., which were used as vehicles in an illegal share-issuance scheme involving Unico Inc. (formerly OTC: UNCO), Advanced Cell Technology Inc. (formerly OTC: ACTC) and other penny stock companies. The SEC’s complaint in that case identified a recidivist securities-law violator named Mark A. Lefkowitz as the U.S. agent of Blue Marble and Kentan. He settled the civil charges and also pleaded guilty in 2012 to a criminal charge of conspiracy to  commit securities fraud. He was sentenced to 10 months in prison.

– Co-Diagnostics got a $500,000 loan from Beaufort Capital Partners LLC in 2015, while still a private company. According to SEC filings, it retired that debt in December 2016 by issuing notes that were convertible to 150,975 shares of stock, representing a 30 percent discount from the IPO price. Beaufort also got warrants to buy more than 113,232 additional shares. Just a few weeks after Co-Diagnostics’ IPO, the SEC brought charges against Beaufort and its manager, Robert P. Marino, in connection with a fraud scheme involving shares of Mainstream Entertainment Inc. (OTC: MSEI, later Volt Solar Systems Inc. (OTC: VOLT). The SEC alleged that Beaufort and Marino bought unregistered shares in Mainstream Entertainment from the perpetrators of a pump-and-dump scheme, and immediately sold them in the market. Beaufort and Marino settled the charges in 2018, agreeing to pay roughly $150,000 in disgorgement, penalties and interest.

–  Co-Diagnostics got $1.1 million in so-called bridge financing from 10 individuals and entities in December 2016, just before it filed the registration statement for its initial public offering. As part of the IPO, the notes they held were converted to stock and warrants. The funders included Catalytic Capital LLC and at least six others who have invested alongside Catalytic or its alter egos in other companies. SEC filings show that Catalytic’s president is Joe Giamichael, a former broker, investment banker and stock promoter. The SEC charged him in July 2017 with violating anti-scalping rules by issuing “buy” recommendations on several stocks through a service called Umbrella Research LLC, while simultaneously selling shares in those same companies. Giamichael and Umbrella settled the charges and were ordered to pay $75,000 in disgorgement, penalties and interest. Co-Diagnostics filed a prospectus for the resale of the stock issuable through the note conversions. It showed that Catalytic and the six others we linked to it got a little over 450,000 shares and warrants. Another of the bridge funders, an investor relations consultant named Jeff Ramson, also has an SEC case in his background.

–  In late 2018 and early 2019, two related companies reported owning 2.26 million shares of Co-Diagnostics’ stock, or 17.6 percent of the total outstanding. Both were controlled by a man named Vladamir Sklarov, who pleaded guilty in 1998 to conspiracy to commit Medicare fraud. Sklarov, who federal authorities described as the person primarily responsible for the $18 million fraud scheme, was sentenced to a year and a day in prison and fined $500,000. Co-Diagnostics later explained in an SEC filing that Brent C. Satterfield, its co-founder and chief science officer, had pledged all of his shares as collateral for a loan. Satterfield said in a lawsuit that he received just $66,000 of the agreed-upon  amount, and that the two companies, Bentley Rothschild Financial LLC and America 2030 Capital Ltd., improperly took control of his stock and sold 900,000 shares on the open market. Satterfield’s suit against Sklarov, the two companies and the transfer agent that allowed ownership to change hands is pending in New York state court.

Cragun, Briggs and Benson never have been charged with wrongdoing by the SEC. However, foreign regulatory agencies issued warnings about some of the boiler rooms linked to Cragun and Briggs, and about some of the stocks the operations were pushing.

Cragun told the Wall Street Journal in 2000 that the SEC had spent five years investigating his activities. He denied being the owner of two boiler rooms, Oxford International Management and PT Dolok Permai, that took millions from foreign investors, some of whom never received the certificates for the shares they supposedly purchased.

However, a court filing in Cragun’s later divorce case included Oxford International and PT Dolok among his assets, which were listed as being in the mid-eight figures, or somewhere in the vicinity of $50 million.

Cragun now lives in the Philippines. Briggs, who was listed as a broker for both boiler rooms, liives in Utah.

(Editor’s note: The connections between Cragun, Briggs, Benson and the boiler rooms were first reported by the St. Louis Post-Dispatch. Chris Carey, editor of Sharesleuth, was a reporter there and produced a series on the overseas stock sales in 2004.)

Boiler room operators have long taken advantage of a set of rules — known as Regulation S – that exempt stock sales to qualified foreign buyers from SEC registration. In some cases, American boiler room operators or their confederates created offshore entities that bought large blocks of shares from small U.S. companies, to be resold at big markups.

Foreign regulators have said such schemes are difficult to stop, because they involve a company in one country selling shares to a company in second country, which in turn sells them to buyers in many additional countries.

Often, the foreign countries have no clear laws or regulations against those practices.



Co-Diagnostics acquired its testing technology in 2015, when it absorbed Satterfield’s company, DNA Logix Inc., through a stock exchange. It originally created tests for malaria, tuberculosis, dengue fever, Hepatitis B and C and other infectious diseases.

The combined company filed a registration statement in April 2017 for its initial public offering. The document said that Co-Diagnostics Ltd., the Turks and Caicos entity, had provided $2 million in capital through a multiyear stock-purchase agreement and $750,000 in exchange for promissory notes. It was to get the equivalent of 2.4 million shares of the newly public company.

But in the final version of the registration statement, filed a few months later, Co-Diagnostics Ltd. no longer was listed among the company’s biggest shareholders. Nor were any new shareholders added to reflect a reallocation of those shares. We noted that the same thing happened with Broadcast International when it went public.

That raises questions about what happened to that stock in the interim. The shares listed for Co-Diagnostics Ltd. in the original registration statement, and the first amended version, would have a market value of $30 million as of April 29.

We also noted that a document in the original registration statement extending the maturity date of the $750,000 note that Co-Diagnostics Inc. issued to Co-Diagnostics Ltd. showed that Benson signed on behalf of Co-Diagnostics Ltd.

His apparent connection to that entity was not disclosed in the ownership table listing his share holdings, or anywhere else in the filing.

Neither Co-Diagnostics Ltd. nor Legend Capital ever filed an SEC Form 13D or 13G disclosing ownership of 5 percent or more of the company’s stock. Nor did anyone else who might have received a portion of the Co-Diagnostics Ltd.’s 20 percent stake.

Although the 1.27 million shares listed for Legends in the August  2019 proxy filing would now be below the 5 percent threshold required for disclosure, Benson’s involvement means that his interest still should be reported. It was not mentioned in last month’s 10-K.

He previously was listed as having an 11 percent interest in Legends Capital, meaning his share of those 1.27 shares would equal roughly 139,000 shares.



Co-Diagnostics said in its IPO materials that it planned to focus on sales to customers in the Caribbean, Central and South America and India in 2017, then add the European Union in 2018 and 2019 and the United States in 2020.

Those markets have been slow to develop.

Co-Diagnostics said in more recent SEC filings that it had just $7,662 in revenue for 2017, and a loss of just under $7 million.

It reported $39,911 in revenue for 2018, and a loss of $6.3 million. Sales rose to almost $214,974 last year, but it remained deeply in the red, with a loss of $6.2 million.

As the Covid-19 virus emerged in China last year and moved to Europe and the United States, established biotech companies sought to develop fast, accurate tests. So did upstarts like Co-Diagnostics.

The company announced on Jan. 23 that it had completed principal design work for a polymerase chain reaction test that could be used to screen for the novel coronavirus.

Its stock more than doubled that day, hitting a high of $2.80 during the trading session, with 36 million shares changing hands. The next day, it announced it was selling 3.44 million new shares to institutional buyers, at $1.45 a share, a steep discount to the market.

Co-Diagnostics’ shares edged upward in late January and early February, trading in the $3 range. On Feb. 13, the company said it raised a further $10 million, just above that price.

Co-Diagnostics’ stock more than doubled again on Feb. 26, hitting a high of $10.89, despite the absence of any news. The next day, the company announced it had sold an additional 470,000 shares at $9 each.

On February 28, the stock nearly doubled one more time, peaking at $19.67 in intraday trading. It closed at $15.96, then hit a new high of $21.75 the next day.

Although the shares were back below $10 for most of March and the first half of April, they surged again on April 16, and have averaged more than $13 ever since.

Co-Diagnostics reported earlier this month that it had received an emergency use authorization from the Food and Drug Administration and had lined up another manufacturer in Wisconsin to help meet demand for its test kits.

It is unclear how many Covid-19 test kits it has sold since then. It said in a recent press release that it has received orders from at least 12 states and 50 foreign countries.

Trading volume in its stock has totaled nearly 900 million shares since beginning of the year. By comparison, the company currently has fewer than 30 million shares outstanding.



We discovered that five companies listed at a Salt Lake City address used by both Benson and Jason Briggs have connections to MB Financial Advisors, the boiler room that shut down in 2018.

According to posts on internet message boards by people contacted by that operation, it offered shares in Co-Diagnostics or its predecessor, DNA Logix, as well as companies the posters referred to as Extenua, Mayan Gold, Clavo Rico and Hamilton.

Utah corporation filings show that Benson was the president of a company called DNA Logix Offering Services Inc., as well as another called Extenua Offering Services Inc.

Nevada filings listed him as president of Mayan Gold Inc. And Co-Diagnostics’ own SEC filings identify him as president of Clavo Rico Inc. and Hamilton Mining Resources Inc. The filings said they provided Co-Diagnostics with $76,000 in early financing.

MB Financial Advisors purported to be a legitimate firm offering early investments in companies that were poised to go public or be acquired, and even put out press releases cheering on  Co-Diagnostics and Extenua Inc.

But our analysis of archived versions of its web site found that chunks of the text were lifted from other, more established firms. That has long been one of the hallmarks of the overseas boiler room operations.

We turned up a memo that the chairman of Extenua Inc. wrote in November 2018 to customers of MB Financial Advisors who were left in the lurch when it closed. It noted that although they had invested in a separate company, Extenua Ltd., their shares would be exchanged for shares in Extenua Inc. in the event of an IPO or other  liquidity event.

The memo’s author was none other than Rodney M. Tiede, who had been Broadcast International’s chief executive at the time that Benson was terminated for his ties to the earlier boiler rooms.

Extenua is a cloud computing and cybersecurity company headquartered in California. So far, the company has not sought to go public, and its current status is unclear.


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