Skip to main content
Press Release

CFO of New Haven Biotech Firm Charged with Embezzling Nearly $1 Million

For Immediate Release
U.S. Attorney's Office, District of Connecticut

John H. Durham, United States Attorney for the District of Connecticut, Phillip Coyne, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of Inspector General, and Patricia M. Ferrick, Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation, announced that THOMAS MALONE, 48, of New Haven, was arrested today on a criminal complaint charging him with embezzling nearly $1 million from a New Haven biotech company that receives federal research grants.

MALONE appeared before U.S. Magistrate Judge Sarah A. L. Merriam in New Haven and was released on a $50,000 bond.

As alleged in court documents, MALONE was the chief financial officer (CFO) of Artificial Cell Technologies, Inc. (ACT) of New Haven, a small biotech company that is currently working on developing better ways to deliver malaria and Respiratory Syncytial Virus vaccines to affected populations.  In addition to receiving funding from private investors, ACT has received approximately $4.1 million in grants from the National Institutes of Health (NIH) since 2008.  As the CFO, MALONE’s responsibilities included collecting, posting, and depositing investor and grant funds; tracking and reporting grant expenditures; managing accounts payable and cash disbursements; facilitating payroll; reconciling ACT credit card and bank accounts; and providing overall financial management.

It is alleged that in November 2016, ACT’s chief executive officer discovered that MALONE was paying himself approximately $660,000 in annual salary, far above the approximately $281,000 in salary he was entitled to receive.  Upon further review of payroll and other financial records, ACT’s CEO discovered that, for several years, MALONE had been writing checks to himself that were disguised as bonuses, that he had been giving himself unauthorized additional salary payments, that he had been using the ACT credit card for personal expenditures, and that he had used ACT’s funds to make unauthorized donations to an organization that MALONE personally supported.  A subsequent forensic audit revealed that, between 2012 and 2016, MALONE had embezzled approximately $950,000 from ACT.

The complaint charges MALONE with theft from a program involving federal funds, an offense that carries a maximum term of imprisonment of 10 years.

U.S. Attorney Durham stressed that a complaint is only a charge and is not evidence of guilt.  Charges are only allegations, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.

This matter is being investigated by the U.S. Department of Health and Human Service, Office of Inspector General, and the Federal Bureau of Investigation.  The case is being prosecuted by Assistant U.S. Attorney Douglas P. Morabito.

Updated March 1, 2018

Financial Fraud