Ex-Valeant, Phili­dor ex­ecs ar­rested for fraud, con­spir­acy

Daily Local News (West Chester, PA) - - MARKETPLACE - By Linda A. Johnson AP Med­i­cal Writer

For­mer ex­ec­u­tives of Valeant Phar­ma­ceu­ti­cals and a re­lated mail-or­der phar­macy were charged Thurs­day with run­ning a frau­dand-kick­back scheme that bilked Valeant out of mil­lions of dol­lars.

Their ar­rests are part of an on­go­ing in­ves­ti­ga­tion of the scheme, ac­cord­ing to Preet Bharara, U.S. At­tor­ney for the South­ern Dis­trict of New York, who an­nounced the charges at a Man­hat­tan news con­fer­ence. Other ar­rests are pos­si­ble, he said.

Bharara’s of­fice said it has charged Gary Tan­ner, a for­mer Valeant ex­ec­u­tive, and An­drew Daven­port, who had been the chief ex­ec­u­tive of Phili­dor, a mail-or­der phar­macy that is now de­funct, with two counts of wire fraud, along with money laun­der­ing and con­spir­acy.

The crim­i­nal com­plaint al­leges that Tan­ner and Daven­port con­spired to en­rich them­selves with Valeant funds af­ter the two helped Valeant set up Phili­dor in early 2013, pri­mar­ily as a ve­hi­cle to mar­ket and dis­trib­ute Valeant drugs.

Ac­cord­ing to the com­plaint, Tan­ner fo­cused on build­ing up Phili­dor’s busi­ness, re­sisted his su­pe­ri­ors’ di­rec­tives to line up other dis­trib­u­tors for Valeant’s prod­ucts and ul­ti­mately re­ceived a $10 mil­lion kick­back from Daven­port. Mean­while, Tan­ner re­peat­edly told Valeant he was fol­low­ing its con­flicts of in­ter­est rules.

The com­plaint al­leges that in the fall of 2014, the two or­ches­trated Valeant’s agree­ment to buy an op­tion to pur­chase Phili­dor, which cost Valeant at least $133 mil­lion. More than $40 mil­lion of that went to shell com­pa­nies con­trolled by Daven­port, in­clud­ing one called “End Game LP,” which kicked $10 mil­lion of that back to Tan­ner.

Daven­port used that money to buy stocks, lux­ury goods and a $50,000 cus­tom wine cel­lar, ac­cord­ing to the com­plaint.

Both men were taken into cus­tody Thurs­day morn­ing at or near their homes and faced court ap­pear­ances later in the day.

Tan­ner, 39, of Gil­bert, Ari­zona, had been Valeant’s pri­mary con­tact with Phili­dor and headed Valeant’s “ac­cess so­lu­tions team,” which worked to get pa­tients’ in­sur­ers to cover brand-name Valeant medicines in­stead of muchcheaper generic ones. Daven­port, 48, of Haver­ford, Penn­syl­va­nia, a Philadel­phia sub­urb, was Phili­dor’s largest owner as well as its CEO.

Valeant has been un­der scru­tiny for ag­gres­sively jack­ing up prices of old drugs with lit­tle or no com­pe­ti­tion and for ques­tion­able ac­count­ing prac­tices, in­clud­ing pre­ma­turely re­port­ing sales of its drugs made through Phili­dor.

Valeant is the tar­get of more than 10 dif­fer­ent gov­ern­ment probes, plus mul­ti­ple share­holder law­suits. Its stock price has plunged more than 90 per­cent since the for­mer Wall Street dar­ling came un­der the mi­cro­scope for its busi­ness and ac­count­ing prac­tices.

At the news con­fer­ence, Bharara cited emails in­ves­ti­ga­tors un­cov­ered in which Daven­port told Tan­ner, using the alias Brian Wilson, he could pic­ture them “rid­ing off into the sun­set.” Tan­ner re­sponded, “Will have to keep play­ing the game,” ac­cord­ing to the com­plaint.

“As of to­day, the game is up and they will not be rid­ing off into the sun­set to­gether,” Bharara said.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.