SEC Slaps Biomet For Foreign Doctor Bribes

SEC Slaps Biomet For Foreign Doctor Bribes

By DEE MOORE 

     (CN) - The Securities and Exchange Commission claims Biomet Inc. bribed publicly employed doctors in China, Argentina and Brazil in exchange for the doctors using its products.
     Biomet is a medical device company which primarily sells orthopedic products including joint and spinal devices used by surgeons, according to the complaint, and the company saw sales totalling $664.6 million for the first quarter of this year.
     According to the complaint, Biomet and a host of related entities paid bribes to doctors at publicly owned hospitals and clinics in Argentina in exchange for sales of the company's products. The doctors allegedly received 15 to 20 percent of each sale. The SEC says before 2000, and the company allegedly falsified document to evade taxes and hide the illicit payments.
     "In order to conceal the illicit purpose of the payments, Biomet Argentina employees obtained phony invoices from doctors stating that the payments were for professional services or consulting when in fact no such services occurred," the complaint states.
     The company allegedly labelled the payments as "consulting fees" or "commissions," but later had to record the payments as "royalties" to circumvent a law forbidding such payments to doctors in Argentina.
     Officials at the company's headquarters in Indiana were aware of this practice as early as 2000, the commission claims, citing memos and other internal communications.
     In August 2008, the company issued new guidelines emphasizing compliance with the Foreign Corrupt Practices Act and the company suspended payments to doctors in Argentina.
     The story is much the same for Brazil and China, the commission says.
     In a memo to the senior vice president and the operations manager the internal auditor wrote, "Brazilian distributor makes payments to surgeons that may be considered as a kickback. These payments are made in cash that allows the surgeon to receive income tax free." The company apparently ceased the practice in Brazil in 2008, according to the complaint.
     Biomet sold its products in China through its subsidiaries Biomet China and Scandimed. The company was aware as early 2001 that doctors in China were also receiving bribes.
     The paper trail of internal documents over the years indicates, according to the SEC, that the company was well aware that doctors in all three countries were being bribed and the bribes were being covered up by auditors and high ranking company personnel.
     The SEC is represented Brent S. Mitchell, Tracy L. Price, Reid A. Muoio and Kara Novaco Brockmeyer.
     

Copyright by Courthouse News Service 2012

http://www.cnssecuritieslaw.com/2012/03/28/277.htm

Damning Times Article Exposed K12 Fraud, Derivative Action Says

By DEE MOORE 

     (CN) - K12 Inc. faces a shareholder derivative complaint accusing the company of deceptive recruiting and sales strategies and violating federal securities laws by issuing false and misleading statements.
     K12 Inc. is a technology based education company which specializes in proprietary curriculum, software systems and educational services. The company provides services to school districts for online programs, hybrid schools, virtual public schools, public charter schools and private schools.
     K12 claimed students enrolled in their online curriculum performed as well as students in traditional schools.
     Plaintiffs claim that thanks to a piece of investigative journalism by the New York Times, these and other questionable practices were brought to light.
     K12 is accused of engaging in "improper practices . . . aimed strictly at enrolling students; administrative pressure from upper management levels to pass students despite poor (or nonexistent) academic performance; overall failure of K12 students to maintain grade level performance in math and reading . . ." the complaint reads.
     After the article was published, K12's market capitalization fell by approximately $393 million or 62 percent.
     According to the complaint, the company derived 85% of its revenue from virtual public schools and hybrid schools which it managed. These are funded by the state and/or local governments on a per student basis.
     "As described in the New York Times article K12 receives and average of $5,500 to $6,000 per student from the state and local governments," the complaint states. To receive this funding the schools must comply with state rules and regulations.
     Alleged violations include high pressure sales recruiting procedures and employee bonuse programs based on enrollment numbers which frequently led to students being enrolled who were clearly not right the program, leading to high enrollment and near immediate withdrawal. The company, however, continued to benefit from the process receiving payments for fees, books and initial tuition from the various governments.
     Since the article appeared, the company has had to reimburse funds to state authorities, pay fees and fines to state and local governments, pay the ongoing costs of a parallel securities class action suit and an internal review and investigation into "the improprieties engaged in by the individual defendants."
     Lead plaintiff Jared Staal named chairman of the board Andrew Tisch; CEO Ronald Packard former advisor to the Department of Defense Educational Advisory Committee; director Craig Barrett who is also chair of the United Nations Global Alliance for Information and Communication Technologies and Development; director Steven Fink who is also chairman of the board of Leapfrog Enterprises Inc.; director Mary Futrell who is a professor at George Washington University where she is co-director of the Center for Curriculum, Standards and Technology; director Jon Reynolds Jr.; director Guillermo Bron; and director Nathaniel Davis.
     Stall is represented by Joseph J. Farnan III of Farnan LLP of Wilmington, Del. and Nicholas Porritt of Levi & Korsinsky LLP of Washington.

Copyright Courthouse News Service 2012

http://www.cnssecuritieslaw.com/2012/03/26/270.htm

OmniVision Hit With Derivative Complaint After Losing Apple Supply Contract

OmniVision Hit With Derivative Complaint After Losing Apple Supply Contract

By DEE MOORE 

          (CN) - OmniVision Technologies Inc. faces a shareholder derivative action for losing its contract as exclusive supplier of camera sensors for Apple's iPhone, iPad and iTouch due to delayed development of a new product.
     OmniVision Technologies designs and markets semi-conductor image sensor devices which are used in a number of consumer and commercial mass market applications including smart phones and cell phones.
     Plaintiff Carpenters Pension Fund of West Virginia names CEO, president and chairman of the board Shaw Hong, vice president of engineering and board member Henry Yang and board members Dwight Steffensen, Joseph Jeng and William Hsu.
     The complaint alleges defendants had prior knowledge that OmniVision's most anticipated new product, an 8 megapixel sensor announced in February 2011, would not be delivered on time and that company board members were aware of this even as they were marketing it and creating a media buzz which increased the demand for shares. Shareholders claim the company's stock traded at artificially inflated levels reaching a high of $36.43 a share last May. At which point insiders, aware of the company's struggles, began to sell off their shares to the tune of $18 million, the complaint states.
     Meanwhile, management continued to issue press releases and make public statements regarding the company's expected positive outlook and high earning potential.
     "We remain focused in executing our plan and schedules with out supply chain vendors and other partners," Hong said in May 2011. "We believe that demand will continue to remain strong for fiscal 2012."
     OmniVision also introduced a slim version of its 5 mega pixel sensor in May, leaving the market bewildered since it became apparent the company was not directing all its energies toward delivering the 8 mega pixel sensor.
     OmniVision publically announced the delay of the new sensor and issued a new lower guidance in August 2011, and the extended delay of the 8 mega pixel sensor resulted in a loss of its key contract with Apple Inc.
     The company had provided the electronics giant with sensors for its third and fourth generation iPhones, iPhone 3Gs, iPhone 4, iPad and iTouch products, the complaint states.
     The Carpenters Pension Fund of West Virginia is represented by Aelish Baig of Robbins Geller Rudman & Dowd LLP in San Francisco and by Benny C. Goodman III and Erik Luedeke of San Diego.

Copyright Courthouse News Service 2012

http://www.cnssecuritieslaw.com/2012/03/26/271.htm

Man Blames Pot Thieves and Police for Many Woes

Man Blames Pot Thieves and Police for Many Woes

By DEE MOORE 

     SPRINGFIELD, Ore. (CN) - A medical marijuana cardholder claims in court that police refused to investigate the theft of his pot plants, but falsely accused him of making pipe bombs, though he told the officers that he used the pipes to make hashish.
     Anthony Beasley sued the City of Keizer and the Marion County District Attorney, in Lane County Court. He alleges trespass, false light/privacy invasion and interference with contract.
     "Because of the inaction of the police, exacerbated by the threats made by the individuals who stole his marijuana with seeming impunity, Mr. Beasley was forced to move himself and his marijuana to another location. Because it was located in another location, the marijuana was seized by the police, leaving Mr. Beasley without his medicine," the complaint states.
     Beasley claims he discovered on Oct. 10, 2007, that thieves had broken into his yard and stole his marijuana plants. Beasley, a licensed medical marijuana user and legal "caregiver-grower" for three other people, claims that neighbors had witnessed the crime, so he was able to tell Keizer police who had stolen his pot.
     Here it gets rather complicated. Beasley claims that the pot thieves broke into his home again a week later and "called the police to report two 'pipe bombs' in Beasley's home."
     The complaint continues: "Ignoring the fact these were the two people who were identified as those who stole marijuana from Mr. Beasley just a week ago, and ignoring the fact that these individuals were in the home of Mr. Beasley illegally, Keizer Police Officers entered the home in search of the alleged 'pipe bombs.'
     "No explosive or 'bomb-like material' was identified.
     "Mr. Beasley called 911 after his landlord informed him the police were there about alleged 'pipe bombs.' The police officers on the scene did not speak to Mr. Beasley until after they entered the home and searched the residence. Mr. Beasley wanted to tell them there were not 'pipe bombs,' that there were pipes for manufacturing hashish; and this is exactly what he told them when they finally chose to speak with him."
     Beasley says he asked the police to arrest the two people who had broken into his home and reported the "pipe bomb," but police refused.
     He claims police knew he was growing the weed legally, as they had made "previous visits to the location."
     Two days later, on Oct. 19, Beasley says, the police offended him again - twice. He says the Keizer Police "distributed" a "media release" about "his troubles with police and thieves," and that "several local periodicals" reported on it.
     Also that day, he says, police returned to his home, with a warrant, to search for hashish.
     Also that day, Beasley says, his landlord evicted him, "due to the false accusations of pipe bombs and manufacturing controlled substances."
     Beasley claims that the search warrant falsely alleged that "hashish in any quantity is a felony not covered by the Oregon Medical Marijuana Act, and the warrant was issued in reliance on that false statement."
     Beasley says it ain't so: that medical marijuana cardholders can make hashish up to "quantities ... permitted by statute."
     As a result of all this, Beasley says, he lost his medicine, he was evicted, and he was refused housing because of his local notoriety, generated by the media release and reports.
     He claims his has suffered due to loss of his medicine, ongoing stress and anxiety.
     "Public disclosure of Mr. Beasley's private facts resulted in forcing him [to] hide away, becoming a recluse," the complaint states.
     "Fear of the public brought about depression, with his mental and emotional stress giving rise to even more serious health problems, including significant weight gain, night terrors, and other health issues."
     He seeks monetary damages.
     He is represented by Brian Michaels and Marianne Dugan of Eugene.  

Copyright Courthouse News Service 2012

http://www.courthousenews.com/2012/03/26/45002.htm

New Photo Website

It's taken me a while, but I am slowly getting my photos up on my new 500px page. Please take a minute to go check it out.


http://500px.com/CameraObscuraStudios/photos

Nestucca Falls To Gaston

UnionBanCal Buyout of Pacific Capital Bancorp. Unfair, Shareholders Say

By DEE MOORE 

     (CN) - Shareholders of Pacific Capital Bancorp filed a class action over an allegedly unfair $1.5 billion buyout deal with UnionBanCal.
     "Put simply," the complaint states, "the defendants are using their control of the company to benefit themselves to the detriment of the company's public shareholders."
     Montey alleges that shareholders will receive inadequate compensation for their shares in the buyout. She also claims that the transaction undervalues the company's stock and that the board failed to attempt to obtain the highest share price for all shareholders before agreeing to the sale, to benefit company chairman, billionaire Gerald J. Ford
     "The deal is designed solely to benefit Ford, who owns approximately 76 % of the company. PCBC's operations are now profitable as the company reported net income of over $70 million for 201l. Similar positive results are expected for 20l2," the complaint states.
     Bloomberg Business Week reports that Ford owns 25 million shares in Pacific Capital and estimates that he personally stands to gain $1.15 billion on his $500 million investment in the company.
     Pacific Capital Bancorp, according to the complaint, has $5.9 billion in assets and is the parent company of Santa Barbara Bank & Trust, operates 47 branches.
     UnionBanCal, meanwhile, has assets valued at $89.7 billion, according to the complaint. Its primary subsidiary is Union Bank which operates 414 branches in California, Washington, Oregon, Texas and New York, as well as two international offices. UnionBanCal is a wholly-owned subsidiary of The Bank of Tokyo-Mitsubishi UFJ, Ltd., which is a subsidiary of Mitsubishi UFJ Financial Group. Union Bank is California's forth largest bank by deposits as measured by the Federal Deposit Insurance Corporation, the lawsuit states.
     Business Wire reports that Former United States Securities and Exchange Commission attorney Willie Briscoe and the securities litigation firm of Powers Taylor LLP are not far behind in their investigation of the sale while Market Watch reports that three other law firms Harwood Feffer LLP of New York City, Johnson & Weaver LLP of San Diego, Calif. and Brower Piven in Stevenson, Maryland, have initiated their own investigations.
     The complaint was filed in the Superior Court of California in Santa Barbra by Keith Cochran and Francis A. Bottini Jr. of Chapin Fitzgerald Sullivan & Bottini LLP in San Diego.

Copyright Courthouse News Service 2012.

http://www.cnssecuritieslaw.com/2012/03/18/259.htm 

Zeltiq Misled Investors in IPO Statements, Shareholders Say

Zeltiq Misled Investors in IPO
Statements, Shareholders Say

By DEE MOORE 

     (CN) - Shareholders of Zeltiq Aesthetics filed a class action against the company alleging that high ranking company officials made misleading statements to the SEC when it filed its IPO prospectus and registration statement.
     Lead Plaintiff Ivan Marcano named president and CEO Gordon Nye and CFO and senior vice president John Howe as well as six directors as defendants. Based in Pleasanton, Calif., Zeltiq "is a medical technology company which engages in developing and commercializing non-invasive products for selective reduction of fat."
     The firm's registration statement allegedly failed to mention that the company was about to make a transition to direct sales in key international markets and that the company's business during the fourth quarter would be affected by seasonal trends that would negatively impact its financial performance.
     The action was prompted by an announcement on March 6 that the company had lost $5.8 million, or $0.22 per share, in the fourth fiscal quarter, as well as a press release that indicated that the company would be lowering its guidance forecast.
     According to the complaint, the company's press release included the statement "During the fourth quarter, we initiated our transition to direct sales in certain international markets, which delayed certain system sales in these markets,
     which along with a report by JP Morgan commenting on the same business forecasting error, led to the company's stock price dropping by 43.38% or from $13 a share to $5.64.
     The company's original IPO filing claimed that it expected the fourth quarter to be a strong revenue quarter "because of our internal plan to continue to release our new product line/enhancements in this quarter beginning in 2012 and because physicians in the United States historically make capital equipment purchases" at this time, the complaint states.
     Marcano is represented by Lionel Z. Glancy, Michael Goldberg, Robert V. Prongay and Casey E. Sadler of Glancy Binkow & Goldberg of Los Angeles and Howard G. Smith of Bensalem, Penn.


Copyright Courthouse News Service 2012.
http://www.cnssecuritieslaw.com/2012/03/18/258.htm 

MetLife Probed by 30 States Over Misuse of Death Database

Shareholders Cry Foul After MetLife Probed
by 30 States Over Misuse of Death Database

By DEE MOORE 

     
     (CN) - A shareholder derivative complaint against MetLife claims the company faced audits from 30 state governments for allegedly failing to set up "adequate claims payment practices and procedures" and failing to ensure that the company "complied with unclaimed property laws."
     Plaintiff Lee Batchelder claims that board members did not properly supervise or monitor the company and allowed it to issue misleading or false statements and filings. MetLife allegedly used the U.S. Social Security Administrations Death Master File (SSA-DMF) to find out if annuity policyholders had died so that they could stop making payments but failed to use the file to determine if the company should begin making payments to life insurance beneficiaries.
     "A significant amount of the company's operating income and investment income is intertwined with procedures and policies used by MetLife in the investigation and paying of claims," the complaint states. "A further investigation into these practices by the Illinois Department of Insurance has been converted into a multistate targeted market conduct exam."
     As part of the investigation in July 2011, New York State's Insurance Department issued a directive that required companies to use the SSA-DMF to determine if death benefits were due to policy holders beneficiaries.
     According to Shareholders Foundation Inc., in August the company reported to the U.S. Securities and Exchange Commission that investigations into its death benefits practices had led to substantial costs thanks to additional state and administrative penalties. This was followed by an October filing indicating that it would cost $115 million in after-tax charges to increase its death benefits practices reserves.
     In addition, the company filed a 10-Q form in November warning that "it is possible that other jurisdictions may pursue similar investigations or inquiries, may join the multi-state conduct exam or issue directives similar to the New York Insurance Department's letter," according to the complaint.
     The complaint seeks a jury trial to force the company to change its policies and practices so that the SSA-DMF is used to determine the death of policy holders and requests restitution from defendants to cover the company's debts, fees and fines resulting from this lack of oversight.
     The suit was filed Joseph E. Levi of Levi & Korsinsky LLP in New York.

Copyright Courthouse News Service 2012

http://www.cnssecuritieslaw.com/2012/03/12/249.htm

KALiCO @ the Ike Box