The former Valeant and Philidor execs accused of engineering a multimillion-dollar fraud and kickback scheme say they did not do it.
Thursday in New York, former Valeant senior director Gary Tanner and former CEO of now-dead specialty pharmacy Philidor, Andrew Davenport, pleaded not guilty to charges from federal prosecutors, Reuters reported. The pair was indicted on four counts, including conspiracy to commit wire fraud and conspiracy to commit money laundering.
The U.S. Attorney for the Southern District of New York, Preet Bharara, announced charges against the pair last November. According to the FBI special agent handling the investigation, Tanner received $10 million in kickbacks issued by Davenport that were "laundered through a series of shell companies and transactions designed to conceal the illicit payments,” DOJ documents said.
The Valeant-Philidor relationship first raised eyebrows in late 2015, when short-seller company, Citron Research, leveled channel-stuffing allegations against the Canadian drugmaker. After Valeant revealed that it had secretly purchased an option to acquire Philidor, an internal investigation turned up $58 million worth of accounting missteps on the part of the Quebec-based company and it severed ties with Philidor—which shut its doors for good.
Valeant stressed in November that it itself had not been charged.
"The counts today include allegations that the charged parties engaged in actions to defraud Valeant as a company," Valeant pointed out.
And that’s a good thing for the embattled company, which already has enough on its plate. In addition to the pricing pushback, debt-default concerns and other investigations that plagued it all though last year, it’s still struggling to turn things around sales-wise—and a recent mass exit of sales reps from its floundering GI unit did not help in that department.