Ex-ArthroCare Chiefs Convicted Of Orchestrating Fraud
This article was originally published in The Gray Sheet
The former top leaders of ArthroCare have been convicted for working in cahoots with distributors to overstate ArthroCare’s earnings. Both face significant prison time for their roles in the scam, according to the Department of Justice.
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The former chief financial officer of device manufacturer ArthroCare Corp. pleaded guilty to fraud in a Texas federal court this week. Michael Gluk reportedly took part in a scheme to manipulate stock prices by falsely inflating ArthroCare’s sales.
The updated US Attorney’s Manual instructs government lawyers to focus on individuals from the launch of civil or criminal investigations into a company, and not to consider individual’s ability to pay a judgment in deciding whether to pursue charges.
The company will pay $30 million, establish a compliance program and cooperate on prosecutions of former executives as part of its resolution of fraud allegations with the Department of Justice. Penalties for ArthroCare were reduced for “extraordinary” cooperation with the feds.