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Home / Politics / News /  Biotech wizard left a trail of fraud

Biotech wizard left a trail of fraud

Gumrukcu started out in biotechnology with only his ideas. One of the first was curing HIV with a one-time cell transplant to block production of a protein used by the virus to penetrate human cells.

  • Serhat Gumrukcu faces trial in a purported plot to kill an associate who threatened to expose him
  • Prosecutors allege that Gumrukcu arranged the murder of a business associate, Gregory Davis, who threatened to expose him as a fraud. Gumrukcu has been in custody since 24 May

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Even as a teenager back in Turkey, Serhat Gumrukcu dazzled audiences.

Even as a teenager back in Turkey, Serhat Gumrukcu dazzled audiences.

In a 2002 video, he opened one of his magic shows dancing with a cane that appeared to be levitating. He was introduced as a medical student and went by the stage name “Dr. No."

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In a 2002 video, he opened one of his magic shows dancing with a cane that appeared to be levitating. He was introduced as a medical student and went by the stage name “Dr. No."

A little more than a decade later, not long after Mr. Gumrukcu arrived in the U.S., he had his hand in multimillion-dollar oil and real-estate deals. Yet his best-known venture was in medicine. For a time, he thrilled investors with ideas for groundbreaking treatments and drew special notice from the government’s top infectious-disease official, Anthony Fauci.

In America, the magician had found a new, more lucrative audience.

Enochian Biosciences Inc., co-founded by Mr. Gumrukcu in 2018, paid more than $21 million to companies controlled by Mr. Gumrukcu and his husband for consulting, research and the licensing of potential drugs to treat influenza, hepatitis B, HIV and Covid-19, company financial filings show.

“Dr. Gumrukcu is one of those rare geniuses that is not bound by scientific discipline or dogma. He sees connections and opportunities often missed," Enochian Vice Chairman Mark Dybul, now chief executive, said in a 2019 news release about Enochian’s licensing of a hepatitis B drug from a company controlled by Mr. Gumrukcu.

Mr. Gumrukcu’s success as a biotech entrepreneur afforded the purchase last year of an $18.4 million office complex in North Hollywood, a neighborhood in Los Angeles, and, earlier, a $5.5 million house in the Hollywood Hills.

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Yet much of what people saw in Mr. Gumrukcu was an illusion he cast, misrepresenting himself and his credentials, according to state and federal authorities, court records, former colleagues and those who have sued and won judgments against him over fraudulent medical and financial dealings.

Prosecutors now allege that Mr. Gumrukcu arranged the murder of a business associate, Gregory Davis, who threatened to expose him as a fraud. Such a revelation would have put at risk the 39-year-old entrepreneur’s deal with Enochian, they said.

Mr. Gumrukcu has been in custody at the Metropolitan Detention Center in Los Angeles since his arrest on May 24. A federal grand jury indicted him on murder conspiracy charges, an offense punishable by death.

His lawyer, Victor Sherman, said Mr. Gumrukcu was innocent during a detention hearing this month in the U.S. District Court in Los Angeles. “I’m not saying this is a weak case against Mr. Gumrukcu," Mr. Sherman told the judge. “I’m saying there is no case."

Enochian has several drugs in development for diseases including HIV and cancer, and it has cited Mr. Gumrukcu as the company’s sole inventor. So far, none of the drugs has entered clinical testing, a step required to demonstrate that a medicine’s promise is strong enough to merit approval.

Enochian Chairman Rene Sindlev said this month that he believes Mr. Gumrukcu holds a medical degree. “I have not personally checked it, but I’m in the process of doing so," Mr. Sindlev said. “His science is validated by leading scientists in the world who find it groundbreaking, and from that I was intrigued and ready to finance the company."

Enochian said Mr. Gumrukcu no longer serves as a scientific adviser and never had a formal role at the company. Since his arrest, Enochian shares have fallen 43% and shed nearly $134 million in market value through Friday.

His royal highness

Mr. Gumrukcu was born and raised mostly in Turkey but spent time in Europe and the Middle East, he said in a podcast interview last year. He speaks more than six languages, he said, including Italian, French and Russian.

He came to the U.S. in 2013, according to prosecutors.

Mr. Gumrukcu, soft-spoken and intelligent, socialized easily with wealthy people in Los Angeles, said friends, acquaintances and business associates. He sometimes introduced himself as the son of a royal Turkish family that reached back to the Ottoman Empire, they said. Mr. Gumrukcu signed business checks HRH, short for his royal highness, according to prosecutors.

He started out in biotechnology with only his ideas. One of the first was curing HIV with a one-time cell transplant to block production of a protein used by the virus to penetrate human cells. The idea had been tried before but failed because patients’ bodies rejected the transplanted cells. He claimed to have come up with a way to make it work.

In business meetings, Mr. Gumrukcu, blond, blue-eyed with a gym-honed physique, wore tailored suits and spoke knowledgeably about medical science and his passion for helping people through his medical research, said a person who had worked with him.

He also was persuasive with families desperate for help. Mr. Gumrukcu treated a Pennsylvania man with experimental stem-cell infusions for cancer, according to a 2016 lawsuit filed against him and won by the man’s family.

The man died, and Mr. Gumrukcu received $253,000 for medical services he never delivered, according to court records. Mr. Gumrukcu didn’t respond to the complaint, court records show. He later paid a judgment set by the court, the family’s lawyer said in a court filing. Mr. Gumrukcu isn’t licensed to practice medicine in the U.S. and has advised but never treated patients, according to his lawyers.

Mr. Gumrukcu’s rise coincided with a booming biotech market in the U.S.

Investor interest was propelled, in part, by scientific advances in such fields as gene therapy, which provides patients with genetically modified cells that can fight cancer or correct mutations that cause inherited diseases, among other things. Venture-capital firms and public-market investors have wagered billions of dollars on prospects for new, game-changing drugs and treatments.

In April 2017, Mr. Gumrukcu registered Gumrukcu Health LLC, and he had no trouble attracting interest. Within weeks, he was consulting with DanDrit Biotech USA Inc., a drug developer backed by Mr. Sindlev, a Danish businessman, according to securities filings.

By July 2017, DanDrit was in talks for a deal with another of Mr. Gumrukcu’s companies, Weird Science LLC. The venture would be built on Mr. Gumrukcu’s unconventional ideas and take the name Enochian, which references a type of occult magic and language supposedly discovered by 16th-century alchemists.

“It was attractive because he was coming with, ‘Oh, we can do this and this!’ He had new ideas all the time," said Eric Leire, who was DanDrit chief executive at the time.

The two sides agreed to a deal on Jan. 12, 2018. It would yield Mr. Gumrukcu a fortune in future drug-licensing agreements, barring any hitch before it was made final.

The body of Mr. Davis had been found five days earlier, Jan. 7, in a snowbank on the side of the road in Vermont. Mr. Davis, 49, who left behind a wife, six children and another on the way, was handcuffed and shot several times in the head and body.

The Federal Bureau of Investigation spent more than four years on the case. The investigation led to a Southern California real-estate deal that showcased Mr. Gumrukcu transforming a neighbor’s house into cash.

Not real property

In 2014, Mr. Gumrukcu bought a house in West Hollywood, Calif., for $1.2 million. Less than two months later, he brought a business proposal to Ersin Akyuz, then the chief executive of Deutsche Bank AG’s Turkish subsidiary, according to court papers that described what happened.

Mr. Gumrukcu told him a house nearby was for sale and suggested they buy it to renovate and sell. Mr. Akyuz agreed to invest $500,000 in a joint-venture to flip the property and signed escrow documents to close the deal.

In the next months, Mr. Gumrukcu requested money for renovations. Mr. Akyuz wired $430,000. Mr. Gumrukcu eventually told Mr. Akyuz that they had a buyer, and the sale was completed.

Mr. Akyuz never received his expected share of the profits. He hired a private investigator and learned the escrow documents had been forged. The house wasn’t purchased by Mr. Gumrukcu and hadn’t been on the market. Mr. Akyuz sued Mr. Gumrukcu and won damages in 2016.

Mr. Gumrukcu’s West Hollywood house was auctioned off to help pay the $1.8 million judgment, according to a county document.

The civil case drew the attention of state and federal authorities. Mr. Gumrukcu was arrested on Feb. 9, 2017, and charged with 14 felony counts related to the real-estate case, including impersonating a lawyer and writing fraudulent checks. The charges also involved $600,000 in bad checks Mr. Gumrukcu had issued in an unrelated oil deal involving Mr. Davis.

On Jan. 25, 2018—nearly three weeks after Mr. Davis was killed—Mr. Gumrukcu pleaded guilty in Los Angeles to a single felony count for passing bad checks and was sentenced to five years’ probation.

Profit motive

Shortly after Mr. Davis’s body was recovered, his wife, Melissa Davis, spoke with state police detectives and the FBI. Mr. Davis told his wife he had been involved in an oil deal involving two investors who were brothers, Serhat Gumrukcu and Murat Gumrukcu, court papers said.

Ms. Davis said her husband, a former commodities trader, told her that he no longer trusted the Gumrukcu brothers, according to court papers. Mr. Davis believed they owed him more than $900,000 for late fees and penalties, court papers said.

A Vermont-based FBI agent contacted a fellow agent in Los Angeles who had investigated Mr. Gumrukcu’s real-estate scheme and the fraudulent checks in the oil deal, court papers said.

The FBI agent in L.A. said that during her investigation she came to suspect Mr. Gumrukcu of another fraud, “claiming to be an American doctor who had a special cure for cancer and AIDS," according to court papers.

The Gumrukcu brothers were questioned in 2018 and denied any involvement in the killing, according to court records. Investigators were silent on the case until this spring, when federal prosecutors alleged that the oil deal provided the motive for Mr. Gumrukcu to plot Mr. Davis’s murder.

Mr. Davis had arranged to broker a deal to buy refined oil products and resell them at a profit, said a person familiar with the matter. The Gumrukcu brothers agreed to put up the cash in exchange for a percentage of the profit, the person said, in a deal valued between $20 million and $30 million.

Mr. Davis had threatened to expose fraudulent bank documentation by Mr. Gumrukcu and his brother to the FBI, according to a court filing by prosecutors. At the time, the Enochian deal was undergoing its final stages of due diligence, according to court papers.

Mr. Davis’s bank-fraud claims could have derailed the deal, the court filing said. That gave Mr. Gumrukcu “a strong motive to prevent Davis from reporting yet another fraud, and likely threatening the Enochian deal," the filing said.

Back on stage

By the end of 2018, Enochian was listed on the Nasdaq, giving the company access to a larger pool of public investors.

The Enochian team assembled on the exchange’s trading floor on Dec. 20 that year to ring the closing bell. Mr. Gumrukcu took center stage.

Little could be verified about how much work Mr. Gumrukcu did in the research and development of the drugs licensed by Enochian. Dr. Leire, the company’s former chief executive, said he began to suspect that Mr. Gumrukcu had fabricated his résumé and held neither a medical degree nor a doctoral degree.

Dr. Leire, a medical doctor and pharmaceutical-industry executive, said he was fired in 2019 after raising his concerns with the Enochian board. “I thought the guy was a liar. Maybe just, you know, taking liberty with science," he said. “But I thought the guy would not hurt a fly."

Dr. Dybul, Enochian chief executive, said Dr. Leire didn’t share any such doubts with the board.

In 2020, the hepatitis B treatment envisioned by Mr. Gumrukcu and licensed by Enochian was brought to the attention of Dr. Fauci, director of the National Institute of Allergy and Infectious Diseases.

Dr. Fauci wrote a Feb. 2, 2020, email to T. Jake Liang, chief of liver diseases at the National Institute of Diabetes and Digestive and Kidney Diseases, asking him to meet with Mr. Gumrukcu and Dr. Dybul, who had once worked for Dr. Fauci at NIH.

Dr. Dybul “will be at the NIH tomorrow with a scientist who has some very interesting data on hepatitis B. I was supposed to meet with them but I am swamped with the coronavirus," Dr. Fauci wrote, according to emails released by the National Institutes of Health under the Freedom of Information Act.

Dr. Liang and Enochian officials had a conference call in June 2020 to discuss the science behind the hepatitis B treatment and future opportunities, Dr. Liang said.

By June 2021, Enochian listed 11 employees and two offices in Los Angeles, including a 3,555-square foot headquarters, according to a financial filing.

Vanishing act

Court papers outline the government’s scenario of the kidnapping: On the night of Jan. 6, 2018, a man drove a police-style SUV up a gravel road to Mr. Davis’s home. Red and blue emergency lights flashed from the SUV’s dash.

The man, armed with a rifle and carrying handcuffs, identified himself as a U.S. marshal and told Mr. Davis he was there to arrest him on racketeering charges. After telling his wife he was under arrest, Mr. Davis left. It was the last time she saw him alive.

Prosecutors allege that Mr. Gumrukcu orchestrated Mr. Davis’s murder, using at least two intermediaries to hire an assassin, according to court papers.

While the plot took shape, Mr. Gumrukcu wired more than $150,000 from Turkish accounts to a longtime family friend named Berk Eratay, a computer programmer in Las Vegas, court papers said.

In April, Aron Lee Ethridge told investigators he had been hired by Mr. Eratay to find someone to kill Mr. Davis, court papers said.

Mr. Eratay gave Mr. Ethridge $100,000 in cash and additional bitcoin payments, court papers said. Mr. Ethridge told investigators he recruited a man named Jerry Banks for the job and paid him with Mr. Eratay’s money.

In April, the FBI arrested Mr. Banks, 34, in Yellowstone National Park, Wyo., where he had been working. Mr. Banks was charged with kidnapping Mr. Davis. He pleaded not guilty at his June 2 arraignment. His lawyer declined to comment.

Mr. Eratay, 35, was arrested in Las Vegas and charged with conspiring to use interstate commerce facilities in the commission of a murder-for-hire. Mr. Eratay denies the allegations against him, his lawyer, Robert Katims, said.

Assistant U.S. Attorney Paul Van de Graaf said during Mr. Gumrukcu’s June 15 detention hearing that Mr. Gumrukcu joined conversations in the alleged conspiracy with Mr. Ethridge and Mr. Eratay over an encrypted messaging app. Mr. Ethridge is expected to testify that Mr. Eratay said he was taking orders from Mr. Gumrukcu, Mr. Van de Graaf said. A lawyer for Mr. Ethridge declined to comment.

Days before his arrest in May, Mr. Gumrukcu sold around 250,000 shares in Enochian for $2 million. They appear to have been purchased by Enochian’s chairman, Mr. Sindlev, for $8 a share on a day when the company’s stock price never exceeded $6.26. On Friday, it closed at $3.33.

Mr. Gumrukcu sold the stock to repay a debt of $1 million and to fund renovations on his office buildings, his lawyer, Mr. Sherman, said in a court filing. “The sale was certainly not intended to fund an attempt to flee the country," he said in court papers regarding Mr. Gumrukcu’s request for bail.

Mr. Gumrukcu’s brother Murat left the U.S. in 2018, shortly after being questioned about the killing, and hasn’t returned, according to prosecutors. He didn’t respond to a request for comment.

The judge denied the bail request. Mr. Gumrukcu is being held in custody pending a July 15 hearing to confirm his identity.

 

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