LexisNexis® and Bloomberg Law are external online distributors of ALM`s extensive collection of current and archived versions of legal news publications. LexisNexis® and Bloomberg Law clients may access and use ALM content, including content from the National Law Journal, The American Lawyer, Legaltech News, New York Law Journal and Corporate Counsel, as well as other sources of legal information. The case remains an open legal matter and the next steps will be determined, MiMedX said in a statement. In a separate case, MiMedx sued Petit and Taylor in Florida state court in January to recover millions of dollars in legal fees and expenses the company had advanced in their defense. Petit and Taylor said in a response to the lawsuit that they were entitled to compensation for legal fees under the agreements with the company. The company had asked U.S. District Judge Jed S. Rakoff to order former Chief Executive Parker H. Petit and former Chief Operating Officer William Taylor to pay $40.2 million in reparations, including tens of millions of dollars they advanced to their lawyers to defend them in the case. On Sunday, Rakoff rejected the request, saying he had no legal authority to do so and that MiMedx himself could have been prosecuted and was therefore not a victim. MiMedx Group Inc. failed to recover more than $40 million in legal and other costs after two former executives were convicted of conspiring to inflate the medical device maker`s revenue. U.S.
District Judge William Ray gave preliminary approval to the settlement this month. A hearing on final approval is scheduled for December 21. The $3.5 million covers legal fees and costs, as well as a payment of $3,000 to each of the seven named complainants. MiMedx has also agreed to reform its corporate governance. The full cost of settlement will be covered by insurance, MiMedx said in a regulatory filing Thursday. To contact the journalist of this article: Chris interprets in a federal court in Manhattan in cdolmetsch@bloomberg.net The allegations resolved by the settlement were first raised in a lawsuit filed by former MiMedx sales employees under the Qui Tam or Whistleblowers provisions of the False Claims Act, that allow private parties to sue on behalf of the government for false claims and receive a share of a recovery. Jess Kruchoski and Luke Tornquist v. MiMedx Group, Inc., 17-cv-00187 (Minn D. ). As part of this settlement, they will receive $1,625,000 as part of the government`s recovery. Federal prosecutors claimed that Petits and Taylor`s alleged manipulation of MiMedx`s revenues led MiMedx to report its 2015 annual revenue, which was fraudulently inflated by about $9.5 million, or about 5 percent.
Former CEO Parker «Pete» Petit and former COO William Taylor were convicted in the U.S. District Court for the Southern District of New York of securities fraud and conspiracy, respectively. The U.S. attorney`s office in Manhattan accused the men of falsely declaring $9.5 million in revenue in 2015 to increase the company`s stock and fill out their own piggy banks, according to a report by Law360. If you have any questions, call 1-877-256-2472 or contact us at [email protected] Without admitting or denying the allegations, MiMedx agreed to a settlement and paid a $1.5 million fine. The settlement is subject to the approval of the court. The legal battle against the three executives continues. The SEC complaint, filed today in the Southern District of New York, alleges that all defendants violated provisions of federal securities laws in the areas of fraud prevention, reporting, books and records, and internal control. The SEC also accused Petit, Taylor and Senken of lying to MiMedx`s external auditors.
Without admitting or denying the allegations, MiMedx agreed to a settlement and paid a $1.5 million fine. The settlement is subject to the approval of the court. The lawsuit seeks a permanent injunction, recovery plus interest, penalties and suspensions against Petit, Taylor and Senken, and recovery of bonuses and other compensation related to incentives paid to Petit and Senken in the alleged fraud. A federal judge in Atlanta said the lead plaintiff could not prove that the loss in value of his shares was caused by revelations of accounting fraud at the Marietta-based biotech company, whose former CEO and chief operating officer are now in jail. The former chief financial officer of biotech company MiMedx Group Inc. has lost an offer to dismiss civil lawsuits filed by the U.S. Securities and Exchange Commission, accusing him of defrauding investors by helping falsify the company`s books. A correction was made to reflect the fact that Petit was acquitted of conspiracy rather than securities fraud. But the defendants denied the allegations, saying they planned to appeal the verdict. Petit was acquitted of conspiracy, while Taylor was acquitted of fraud. Senken had argued that he was not overseeing the deal, but Buchwald said the evidence, including internal company communications, showed he was «clearly aware of the deal or reckless because he didn`t know.» To contact the editors responsible for this article: David Glovin of dglovin@bloomberg.net Parker Petit, founder and former president and CEO of MiMedx, and other defendants have also agreed to the settlement, but it`s unclear if they`ll contribute to the payments. Petit, 81, was convicted of securities fraud and Taylor, 52, was convicted of conspiracy to commit securities fraud, making false statements in SEC filings and deceptive conduct of audits, according to a U.S.
attorney`s office for the Southern District of New York. «As our complaint alleges, former MiMedx executives misled investors about MiMedx`s revenue growth and then repeatedly covered up their fraud,» said Kurt Gottschall, director of the SEC`s Denver regional office. «This measure reflects our commitment to hold issuers and their officers accountable for their failure to provide accurate financial statements to the investing public, while the settlement with MiMedx appropriately recognizes the Company`s subsequent turnaround and collaboration. The SEC`s complaint, filed today in the Southern District of New York, alleges that all defendants violated the anti-fraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934 («Exchange Act») and Rule 10b-5 below. The complaint also alleges that MiMedx violated the reporting and record-keeping provisions of sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 and that Petit, Taylor and Senken supported and facilitated MiMedx`s violations of those provisions and anti-fraud provisions, or that Petit and Taylor acted as controllers for MiMedx violations. In addition, the complaint alleges that Petit, Taylor and Senken directly violated Section 13(b)(5) of the Exchange Act and Rules 13b2-1, 13b2-2 and, with respect to Petit and Senken, 13a-14. The lawsuit seeks a permanent injunction, recovery plus interest, penalties, attorneys` bans against Petit, Taylor and Senken, and recovery of bonuses and other compensation related to incentives paid to Petit and Senken in the alleged fraud. «Today`s agreement demonstrates our continued vigilance to ensure that those who do business with the government charge a fair price for their goods,» said Deputy Attorney General Jody Hunt of the Department of Justice`s Civil Division. «Government contractors will not be allowed to make undue profits at taxpayers` expense.» This article has been updated with information from the U.S. Attorney`s Office for the Southern District of New York. The DOJ already appeared to be investigating MiMedx`s sales and distribution practices.
The company has faced lawsuits from former employees accusing it of fraudulently increasing sales. And it has spent several years defying the FDA to determine whether its products meet regulatory standards. MiMedx, which makes regenerative and therapeutic biologics using allografts of human placental tissue, ousted Petit and Taylor for good reason after an independent investigation into revenue accounting forced MiMedx to restate its 2012 profits. The investigation found that Petit and his management team had hatched a plan to rig the books in revenge on anyone who questioned their accounting practices and secretly filmed their offices.
