Whistleblower News: Opioids, SEC, Ponzi Scheme, Insys05/02/2018
The Pain Hustlers.
The Opioid That Enriched Its Maker — and Its Prescribers
Insys Therapeutics paid millions of dollars to doctors. The company called it a “speaker program,” but prosecutors now call it something else: a kickback scheme.
Selling drugs is a relationship business. It’s best to do it in person. That is why, on a summer evening in 2012, Alec Burlakoff was out for dinner with Steven Chun, the owner of Sarasota Pain Associates. Burlakoff was a sales manager for Insys Therapeutics, an Arizona-based pharmaceutical company with only one branded product, a new and highly potent opioid painkiller called Subsys. Chun was a doctor who prescribed a lot of opioids.
The location was a moderately expensive seafood restaurant in Sarasota, Fla., with linen tablecloths and large windows overlooking the bay. The sun was still high in the sky. Gleaming powerboats lined the docks outside, and a warm breeze rippled the water. On one side of the table were Burlakoff and Tracy Krane, an Insys sales representative. Krane was a newcomer to the industry, tall with dark brown hair in a bob. Burlakoff, then 38, with a slight frame and a boyish restlessness, was her new boss. He had years of experience in the opioid market. Colleagues marveled over his shameless push to make the sale, but he had a charisma that was hard to resist. Even people who didn’t trust him couldn’t help liking him.
Krane was there to learn the business, and the meeting made a vivid impression. Chun, then 49 and stout, had impeccable credentials: He was trained at the University of Washington, Cornell Medical College and the Memorial Sloan Kettering Cancer Center. He had been married at the Fifth Avenue Presbyterian Church in Manhattan, to a Juilliard-trained violinist who is the daughter of a former chief executive of Korean Air, but had since divorced. At Burlakoff’s invitation, he had brought his girlfriend at the time, a woman in her mid-20s, to dinner. read more »
SEC Shuts Down $85 Million Ponzi Scheme and Obtains Asset Freeze
The Securities and Exchange Commission today announced the unsealing of fraud charges against a Mississippi company and its principal who allegedly bilked at least 150 investors in an $85 million Ponzi scheme. The defendants agreed to permanent injunctions, an asset freeze, and expedited discovery.
The SEC’s complaint alleges that Arthur Lamar Adams lied to investors by telling them that their money would be used by his company, Madison Timber Properties, LLC, to secure and harvest timber from various land owners located in Alabama, Florida, and Mississippi, and promised annual returns of 12-15%. But Madison Timber never obtained any harvesting rights. Instead, Adams allegedly forged deeds and cutting agreements as well as documents purportedly reflecting the value of the timber on the land. Adams also allegedly paid early investors with later investors’ funds and convinced investors to roll over their investments. According to the complaint, Adams used investors’ money for personal expenses and to develop an unrelated real estate project.
“Investors should be wary anytime they are promised high or consistently positive returns,” said Richard Best, Director of the SEC’s Atlanta Regional office. “We acted quickly in this case to protect the victims of the alleged Ponzi scheme by obtaining immediate injunctive relief and an asset freeze.”
In a parallel action, the U.S. Attorney’s Office for the Southern District of Mississippi today announced criminal charges against Adams.
The SEC’s complaint, filed under seal in federal court in Jackson, Mississippi on April 20, 2018 and unsealed today, charges Adams and Madison Timber Properties with violating the antifraud provisions of the federal securities laws. The court granted the SEC’s request for an asset freeze and permanently enjoined Madison Timber and Adams from violating the antifraud provisions of the federal securities laws and ordered Adams to surrender his passport. Adams and Madison Timber consented to the entry of the court order. read more »
Former Autonomy Executive Sushovan Hussain Convicted of Accounting Fraud
Hussain found guilty of 16 counts of wire, securities fraud
Former executive blamed HP, cited string of failed deals
The former chief financial officer of Autonomy Corp. was found guilty of orchestrating an accounting fraud to arrive at the $10.3 billion price Hewlett-Packard Co. paid for the U.K. software maker more than six years ago.
A jury voted to convict Sushovan Hussain Monday on all 16 counts of wire and securities fraud after three days of deliberations in San Francisco federal court.
Autonomy was the U.K.’s second-largest software business when Hewlett-Packard acquired it in 2011. Hewlett-Packard later wrote down its value by $8.8 billion, citing fraud by Autonomy and asking the U.S. Justice Department to investigate.
The guilty verdict is a win for prosecutors in an office that has suffered recent losses, and at least partially vindicates Hewlett-Packard. It also gives the company momentum as it heads toward a trial next year in London in a $5 billion civil suit against Hussain and Autonomy co-founder and former Chief Executive Officer Mike Lynch.
John Keker, Hussain’s lawyer, declined to comment. read more »