APDN WILL BE DELISTED FROM NASDAQ PERMANENTLYThe Shocking Case of Dr. James Hayward and Applied DNA Sciences: A Two-Decade Fraud Hidden in Plain Sight By Dr. S. Brian Turner, M.D. For: Institutional Investors, NASDAQ Market Watch, and the U.S. Securities and Exchange Commission
Introduction: A Cautionary Tale of Biotech Gone Bad In the high-stakes world of biotech investing, few stories are as bizarre, as long-lasting, or as destructive as that of Dr. James Hayward and Applied DNA Sciences, Inc. (NASDAQ: APDN). Over a span of more than twenty years, APDN—under Hayward’s leadership—raised tens of millions from investors, made sweeping technological claims, and issued an endless stream of press releases touting partnerships, breakthroughs, and revenue projections. The result? A stock that has collapsed by over
99.999%,
zero profitable quarters, and nearly
half a billion dollars in investor losses.
Despite the staggering red flags—intellectual property theft, financial misrepresentation, regulatory interventions, and failed products—APDN continues to trade on the NASDAQ. This is not merely a case of a struggling startup. It is, as critics argue, one of
the longest-running stock frauds in U.S. history, enabled by institutional apathy, negligent oversight, and perhaps even regulatory loopholes.
Early Warnings Ignored: The Red Flags from the Beginning From its founding, APDN promised revolutionary solutions in DNA tagging, authentication, and synthetic biology. But even in its early years, APDN failed to attract any venture capital, never secured any bank loans, and did not post a single profitable quarter. This wasn’t due to market conditions; rather, the company’s core technology—linear DNA for anti-counterfeiting and therapeutics—was either
technologically uncompetitive or
scientifically unproven.
According to extensive documentation, Hayward has
never published peer-reviewed studies in respected scientific journals to support the company’s touted breakthroughs. Instead, he has repeatedly relied on investor-facing press releases, often outlandishly comparing his inventions to the amazing discovery of penicillin or Edison’s invention of the incandescent light bulb. (1
st quarter 2015 conference call transcript.)
One particularly infamous claim recently involved a "Big Pharma acquisition" that turned out to be a one-man Canadian startup. This bait-and-switch behavior was not an anomaly, but rather
a consistent feature of Hayward’s modus operandi.
The Unpaid Executives and the Perjury Scandal Upon taking over as CEO of Applied DNA Sciences, Dr. James Hayward faced a dire financial situation. The company was on the verge of insolvency and lacked the funds to pay its executive staff. In an act that some initially interpreted as entrepreneurial grit, Hayward persuaded his leadership team to continue working
without pay, assuring them that once he sold his revolutionary DNA anti-counterfeiting technology, they would be rewarded.
But the promised payday never came.
Just a few months later, Hayward abruptly terminated these same unpaid executives, accusing them of conspiring to harm the company—a charge that was later exposed as fabricated. The fired executives filed for
unemployment compensation, which Hayward and the company opposed, claiming the executives had acted in bad faith.
The matter escalated to the
California Court of Appeals, which ruled in favor of the terminated employees. The appellate opinion was damning: the court explicitly found that
Hayward’s allegations were false, and
that he had knowingly submitted perjured testimony in an attempt to block the executives from receiving basic unemployment benefits.
One of his former unpaid executives sued CEO Hayward - Paul Reep v. Applied DNA Sciences, Inc. - and recovered $40,000 in a legal settlement.
This episode not only illustrates Hayward’s willingness to betray loyal employees but also confirms judicial findings of
intentional deceit and perjury—a rare and serious accusation in civil litigation. Such conduct should be of
grave concern to the SEC and NASDAQ, as it raises red flags about the integrity of APDN’s leadership and its corporate governance.
The DNA Reader That Didn’t Exist: Early Fraudulent Press Releases In its formative years, Applied DNA Sciences issued numerous press releases extolling its “revolutionary” DNA authentication platform. These statements implied that the company possessed not only the ability to tag items with DNA markers but also the technological means to
read and validate those tags at scale.
However, there was one glaring omission:
the company had not yet invented the necessary DNA reader. This critical limitation was concealed from investors and the public. As a result, APDN’s communications created a
materially false impression about the product’s readiness for commercial deployment. The deception helped the company raise funds under
false pretenses, laying the foundation for years of investor losses.
This episode constitutes a
textbook case of securities fraud, involving the omission of material facts in forward-looking statements—exactly the type of conduct the
SEC’s Enforcement Division is charged with prosecuting.
Defrauding the Defense Logistics Agency: A “Waste of Taxpayer Money” In what was marketed as a breakthrough in anti-counterfeiting security, Applied DNA Sciences secured a contract with the
U.S. Department of Defense’s Defense Logistics Agency (DLA). The company claimed its DNA tagging system could trace and authenticate military supply chain parts, protecting against counterfeit components that could jeopardize national security.
But in practice, the technology failed spectacularly.
After years of implementation, internal reviews at the DLA revealed that Applied DNA’s system was unreliable, difficult to manage, and produced
no measurable benefit. The agency ultimately terminated the contract and described the project as a
“waste of taxpayer money.” Despite the failure, Hayward continued touting the DLA engagement in press releases and investor calls, misleading stakeholders into believing that the partnership was a success. This misrepresentation helped the company raise additional capital even as the federal government was quietly discarding the technology.
Such deception around government contracts should be scrutinized for potential violations of the
False Claims Act and may warrant further investigation by the
Department of Defense Inspector General and the
GAO.
Connections to the Olympus Scandal: Hayward’s Questionable Network In 2011, another shadow in Hayward’s orbit stemmed from his association with a business associate, Sidney Braginsky, later implicated in the
Olympus Corporation scandal—one of the largest corporate frauds in Japan’s history that rocked the country. Olympus executives were found to have hidden over $1.7 billion in investment losses through fraudulent accounting practices over a span of decades.
While Hayward was not personally named in the Olympus prosecution, one of his known associates was involved in the scheme, raising uncomfortable questions about the
ethics of those in his inner circle.
This connection further paints a portrait of a CEO operating in ethically gray territory—surrounded by figures linked to financial misconduct, questionable accounting, and shareholder deception. For investors and regulators, such affiliations should be cause for heightened scrutiny and compliance review.
False Promises, Real Money: How the Scheme Worked The heart of Hayward’s long-running scheme was simple:
manufacture excitement, raise capital, and
cash in through executive compensation and favorable equity deals. Here’s how it unfolded:
- Over 20 years, APDN underwent multiple reverse stock splits to avoid delisting—five at last count, with a sixth looming.
- Despite the lack of revenues, Hayward received over $30 million in compensation, including “performance bonuses” for years in which the company lost money.
- According to SEC filings, APDN diverted disproportionately large funds toward insider compensation rather than research and development.
- The company consistently failed to disclose material risks in press releases, a violation of basic investor transparency rules.
In one particularly egregious case, Hayward
converted a personal loan to the company into stock at highly favorable terms, netting himself a $1.4 million profit. Meanwhile, the company's financial reports admitted it faced "substantial doubt about our ability to continue as a going concern."
Toxic Partnerships and a Culture of Criminal Association One of the most disturbing aspects of the APDN saga is Hayward’s
pattern of associating with known felons, fraudsters, and financial manipulators:
- Richard Langley, a co-founder and convicted stock swindler, helped launch APDN.
- Robert DePalo, a financier with ties to Hayward, was convicted of defrauding investors out of $6.5 million, spending it on Rolls Royce automobiles and expensive Rolex watches.
- Ronald Heineman, another Hayward associate, was previously barred by FINRA for fraud.
The company's
early partnership with Rudy Giuliani's law firm—at a cost of $1.25 million —that nearly wiped out the company bank account — and millions more in warrants—ended quickly once media exposure highlighted the shady financial dealings and corruption surrounding APDN. Moreover, Rudy never did any work for the company and simply walked away with his $1.25 million. And shockingly, Hayward never attempted to get any of the company money returned and no one asked any questions.
Intellectual Property Theft: A Disturbing Pattern of Patent Infringement A deeply troubling aspect of Dr. Hayward’s leadership is his repeated willingness to appropriate intellectual property without authorization. Several business entities have accused APDN under Hayward’s direction of engaging in
patent infringement—replicating proprietary processes and technologies without proper licensing or credit.
There was a lawsuit - Demodulation, Inc. v. Applied DNA Sciences, Inc. – involving a patent infringement case against Applied DNA Sciences. Defendant APDN challenged the Plaintiff’s allegation regarding patent infringement. Specifically, Demodulation alleged that APDN “infringed those patents by making, selling, and using ‘DNA Embedded Amorphous Micro Wire security products.’” The court ruled against CEO Hayward and found in favor of Demodulation.
In 2012, there was another lawsuit - SmartWater, Ltd. v. Applied DNA Sciences, Inc. – where SmartWater sued Applied DNA Sciences for patent infringement. SmartWater alleged that APDN stole two of their patents. SmartWater remained confident that it would win the lawsuit based on two patents infringed by Applied. However, SmartWater decided to drop the lawsuit based on its concerns about Applied’s financial condition, as disclosed in its financial reporting which made it unlikely that Applied would have sufficient financial resources to pay any judgment SmartWater might obtain.
This behavior not only exposes the company to civil liability but also casts serious doubt on the originality of its so-called innovations. In a sector driven by R&D credibility and patent protections, such allegations are especially damaging. They call into question whether APDN has ever truly created anything novel—or simply stolen ideas and repackaged them with deceptive flair.
The pattern of disregarding intellectual property law further emphasizes the need for
USPTO oversight and
federal legal action. Investors and business partners alike should beware of associating with a company led by someone so cavalier with others’ innovations.
The Patronus Systems Deal: Smoke, Mirrors, and No Revenue In 2015, Dr. Hayward and Applied DNA Sciences issued a press release announcing an “exclusive five-year agreement” with a UK-based entity named
Patronus Systems Ltd., described vaguely as a security solutions company. The announcement triggered a short-lived stock rally, suggesting to investors that APDN had secured a major international partnership with strong commercial upside.
But the truth behind the Patronus deal tells a different story:
- No revenue terms were disclosed—a red flag for any supposed long-term, exclusive deal.
- The press release did not clarify what services Patronus would provide, or what technology APDN would deliver.
- Independent research revealed that Patronus Systems Ltd. was a virtually unknown, minimally capitalized company with no verifiable track record or commercial presence. In other words, Patronus was a Shell Company sans assets.
The market reaction was swift. After the initial stock bump, APDN’s share price
plummeted to new lows as investors realized the deal lacked substance. It is now widely regarded as another example of Hayward using inflated and opaque press releases to
manufacture hype and manipulate investor sentiment, only to quietly abandon the initiative once capital was raised or trading activity peaked.
This raises serious concerns about
Regulation FD (Fair Disclosure) and the need for
truthful, complete, and non-misleading public disclosures, particularly from NASDAQ-listed companies.
Hayward’s Press Releases: Silence on Financial Terms and Investor Risk A defining feature of Dr. Hayward’s communication strategy has been the
systematic omission of financial terms from APDN press releases. Time and again, Hayward has announced partnerships, technological breakthroughs, and expansion initiatives without providing investors with the most critical information:
costs, revenue projections, payment structures, or contractual obligations.
This pattern of nondisclosure carries major ramifications:
- Investors are left in the dark, unable to perform basic due diligence or assess the financial viability of the company’s announcements.
- The lack of material detail distorts valuation—short-term surges in stock price are often based on enthusiasm, not fundamentals.
- It increases regulatory risk, as material omissions in public statements can trigger enforcement under SEC Rule 10b-5, which prohibits misleading statements in connection with securities trading.
- Institutional investors and analysts are dis-incentivized from engaging with APDN, viewing its communication style as evasive and unprofessional.
This persistent opaqueness creates a market where
retail investors bear the brunt of volatility, often buying-in during spikes fueled by vague, promotional language—only to suffer steep losses when no commercial follow-through materializes.
The COVID-19 Scandal: Public Health Meets Corporate Deception The pandemic gave Hayward a new opportunity: APDN secured a
$35 million COVID testing contract with the City University of New York (CUNY). But the tests were so unreliable that:
- The FDA issued a cease-and-desist letter, citing dangerous false negatives.
- CUNY terminated the contract, and students were left in limbo due to slow turnaround times.
- APDN withdrew its test from the market after failing to adapt it to new COVID variants.
This debacle severely damaged public trust and should have triggered regulatory enforcement. Instead, APDN continued to issue upbeat press releases about its technology pipeline, now pivoting to
experimental mRNA and saRNA therapeutics—fields dominated by well-capitalized firms like Moderna—that APDN knew would be extremely difficult if not impossible for a small under-capitalized company to achieve.
The Monkeypox Debacle: A Public Health Headline Without a Product In the summer of 2022, as global concern about the Monkeypox virus mounted, Applied DNA Sciences (APDN) once again seized the opportunity to position itself as a biotech front-runner. On August 4, 2022, the company issued a press release touting the development of a “highly sensitive PCR-based Monkeypox test.” The announcement generated intense trading activity—
over 300 million shares were exchanged in just four trading days, despite the company’s float consisting of only 12 million shares. The stock price temporarily surged by over
900%, leading some market watchers to suspect coordinated promotion or outright manipulation.
But the market euphoria was short-lived—and ultimately unfounded.
Despite the fanfare,
APDN never delivered a single Monkeypox test to market. There was no FDA Emergency Use Authorization, no published data, and no customer deployment—
nothing. It was, by all accounts, a textbook case of premature hype designed to inflate investor interest without a tangible product to back it up.
To make matters worse:
- APDN’s press release omitted critical risk disclosures regarding regulatory approval timelines and production capability.
- The company never followed up with substantiated results or clinical validations.
- Investors who bought into the spike suffered massive losses as the stock quickly collapsed back to pre-announcement levels.
This episode wasn’t just a failure in product delivery; it was a potential violation of SEC Rule 10b-5, which prohibits materially misleading statements in connection with the purchase or sale of securities. It raises
serious questions about whether the Monkeypox announcement was an attempt to manipulate the market.
Despite the glaring red flags, no action has been taken against the company or its leadership. Meanwhile, Hayward and his board remain silent on the failed initiative, pretending as though its Monkeypox test never existed.
In retrospect, the Monkeypox debacle was not a deviation from APDN’s history—it was a continuation of it. Just like its failed COVID-19 tests, vaporware DNA tagging products, and overhyped therapeutic pipelines, the Monkeypox test became yet another unfulfilled promise used to raise capital, generate headlines, and enrich insiders at the expense of investors.
H.C. Wainwright & Co.: APDN’s Dubious Investment Banker and the Monkeypox Market Surge No examination of Applied DNA Sciences (APDN) would be complete without acknowledging the role of its long-time investment banker:
H.C. Wainwright & Co. A firm that has become synonymous with dilutive equity offerings and questionable stock promotions, H.C. Wainwright has repeatedly faced allegations of enabling
pump-and-dump schemes that leave retail investors holding the bag.
H.C. Wainwright’s involvement with APDN became especially suspect during the 2022
Monkeypox debacle. On August 4, 2022, following APDN’s press release announcing a purported breakthrough Monkeypox test, the company's stock exploded in volume and price—
trading over 300 million shares in just four days with a float of only 12 million. The surge was extreme even by speculative biotech standards.
Shortly afterward,
APDN announced a dilutive offering—with H.C. Wainwright serving as sole placement agent. This timing raised immediate red flags. The sequence appeared to follow a familiar pattern:
- Hype: APDN released unsubstantiated but sensational news about a Monkeypox PCR test with no disclosed FDA approval or clinical data.
- Pump: The announcement triggered massive retail trading, driving up the share price.
- Dump: APDN and H.C. Wainwright quickly moved to capitalize by issuing new shares into the market, heavily diluting existing shareholders.
This sequence is particularly troubling because:
- No Monkeypox product was ever delivered, and APDN never followed up with performance data or customer adoption.
- Investors who bought during the surge suffered near-immediate losses, as the stock price collapsed once the public realized there was no viable product.
- Wainwright earned fees regardless of the outcome, incentivizing the firm to encourage capital raises on the back of short-term stock spikes, irrespective of long-term shareholder value.
H.C. Wainwright’s track record with microcap biotech firms is checkered. The firm has been repeatedly
fined by FINRA and
criticized by market analysts for involvement in highly dilutive offerings tied to stock price volatility. Critics argue that its model relies on a churn of speculative companies that use news-driven price surges to issue new equity.
In APDN’s case,
the partnership with Wainwright appears to have facilitated some of the most egregious investor losses, particularly around the Monkeypox episode. Yet, there has been
no accountability for the damages caused—either to APDN leadership or to Wainwright.
This pattern raises serious regulatory questions:
- Was the Monkeypox announcement coordinated with the capital raise?
- Did H.C. Wainwright adequately disclose risks to institutional and retail buyers?
- Are there systemic loopholes allowing firms like Wainwright to exploit short-term volatility under the guise of “capital markets services”?
To restore confidence in biotech markets and protect public investors, these questions deserve immediate investigation by
the SEC, FINRA, and NASDAQ compliance authorities.
A House of Cards: Financial Realities and Auditor Warnings Investors may not be aware that:
- APDN’s revenue has declined by over 60%, with no profitable products.
- Three customers represent the bulk of APDN's revenue, a precarious situation given its history of losing major contracts.
- The SEC has flagged APDN for accounting irregularities, and multiple law firms have launched investigations into securities fraud and misrepresentation.
Despite this, Hayward remains in control, protected by a Board of Directors that has either failed in its fiduciary duty or is complicit in APDN’s ongoing charade.
The Technology Myth: APDN's Obsolete Science APDN’s claims about its “cutting-edge” linear DNA and PCR technology don’t hold up under scrutiny:
- Touchlight Genetics, a competitor, has already developed superior synthetic DNA ("dbDNA") with validated clinical trials, FDA clearance, and contracts with Pfizer.
- Experts have labeled APDN's methods as "dinosaurs" in a rapidly evolving biotech landscape that now incorporates AI, nanotech, and real-time data analytics.
- APDN has never produced peer-reviewed validation or replicated studies to support its claims—violating standard scientific protocol.
Even basic technical issues like
contamination, low yields, and inhibitor interference plague APDN’s production pipeline.
Even the company motto in its press releases is fraudulent – “
a leader in PCR-based DNA technologies” For over 25 years, APDN has not posted even one profitable quarter. How can a leading company not be profitable after 25 years?
Regulatory Call to Action To regulators and institutional watch dogs:
- Why is this company still listed on NASDAQ?
- Why has the SEC not moved forward with formal charges despite documented perjury, IP theft, and repeated investor deception?
- Why have independent audits not triggered immediate compliance actions or trading halts?
Investors are losing faith—not just in APDN, but in the system that allows it to persist.
Conclusion: Time for Accountability Dr. James Hayward’s story is not one of bold scientific failure; it is one of
calculated deception, self-enrichment, and systemic manipulation. Investors have lost hundreds of millions. The public has been misled. And regulators have, so far, failed to act decisively.
This isn’t just a story of a failed company. It’s a case study in
how unchecked executive power, combined with ineffective oversight, can devastate markets and destroy trust. NASDAQ, the SEC, and investor protection agencies must act. Delisting, enforcement actions, and criminal referrals should be considered. The future of fair markets depends on it.