Former ArthroCare execs get decades in prison for $750M 'epic tale of greed'
Creatas
Former Arthrocare Corp. executives were sentenced to decades of prison time for their role in a fraud case.
- Christopher Calnan[1]
- Staff Writer- Austin Business Journal
- This email address is being protected from spambots. You need JavaScript enabled to view it.[2] | Twitter[3]
Four former ArthroCare[4] Corp. executives including the former CEO were sentenced Friday to prison terms for their role in a $750 million federal securities fraud case.
U.S. District Judge Sam Sparks[5] handed down a 20-year sentence for former CEO Michael Baker[6] and 10 years for former Chief Financial Officer Michael Gluk[7] two months after they were convicted by a federal jury of inflating the Austin medical products company’s earnings in a scheme that involved hiding so-called sold products in a Florida warehouse.
Also Friday, two former senior vice presidents — John Raffle[8] and David Applegate[9] — were sentenced to 80 months and 60 months respectively for their roles in the fraud, according to the U.S. Department of Justice.
Baker and Gluk, who were accused of altering records to inflate ArthroCare's stock price from 2005 to 2009, were also ordered to forfeit the more than $25 million they netted from the scheme that Principal Deputy Assistant Attorney General Marshall Miller said represented an "epic tale of greed.”[10][11][12]
Miller also said the case should serve as a cautionary tale for executives looking to profit from "cooking the books" of their companies.
"This was a massive accounting fraud scheme, of a size and scope seldom seen," he said in a written statement. "These corporate executives told lie after lie in an attempt to inflate their own bank accounts. In the end, they only inflated their own prison sentences."
Austin-based ArthroCare (Nasdaq: ARTC), founded in 1993, develops surgical devices designed to enable minimally invasive procedures. The company is Austin’s largest medical device business and reported $377.9 million in revenue for 2013. It employs 270 workers in Austin and a total workforce of 1,800, according to the 2014 Austin Business Journals Book of Lists. It topped our most recent list of the largest local medical device makers[13].
Christopher Calnan covers technology, finance and clean energy for the Austin Business Journal. Subscribe to the Energy Inc. newsletter[14]
References
- ^ Christopher Calnan (feeds.bizjournals.com)
- ^ This email address is being protected from spambots. You need JavaScript enabled to view it. (feeds.bizjournals.com)
- ^ Twitter (twitter.com)
- ^ ArthroCare (www.bizjournals.com)
- ^ Sam Sparks (feeds.bizjournals.com)
- ^ Michael Baker (feeds.bizjournals.com)
- ^ Michael Gluk (feeds.bizjournals.com)
- ^ John Raffle (feeds.bizjournals.com)
- ^ David Applegate (feeds.bizjournals.com)
- ^ accused of altering records (www.bizjournals.com)
- ^ Marshall Miller (feeds.bizjournals.com)
- ^ "epic tale of greed.” (www.justice.gov)
- ^ list of the largest local medical device makers (www.bizjournals.com)
- ^ Subscribe to the Energy Inc. newsletter (www.bizjournals.com)