Arrested Arizona billionaire resigns seat on Insys board
John Kapoor, the founder and former chairman and CEO of Chandler-based Insys Therapeutics, resigned his board seat over the weekend following his arrest last week on charges that include racketeering, conspiracy to commit mail fraud, conspiracy to commit wire fraud and conspiracy to violate an anti-kickback statute.
Patrick Fourteau, a veteran pharmaceutical company executive, also resigned from Insys’ board after serving six years. The company accepted both resignations.
Separately, Insys announced that it has compiled $150 million in reserves as potential settlement funds for the Department of Justice’s investigation against it.
Kapoor, 74, who was on Insys’ board since the company’s formation in 1990,stepped down in January as chairman. He appeared in U.S. District Court in Phoenix Oct. 26, after having been arrested that day at his Phoenix home.
He was ordered to submit to the attachment of a monitoring device, not leave Maricopa County and surrender his passport as he awaits an arraignment in Boston next month. Six former offIcials of Insys, which has 400 employees, also face charges.
Kapoor was listed among the seven richest Arizonans by Forbes last year with an estimated net worth at the time of $2.1 billion.
The U.S. Attorney’s Office in Massachusetts said Kapoor and the other former company officials conspired to bribe medical practitioners in various states to encourage them to prescribe a powerful narcotic intended to treat pain for cancer patients. In exchange for bribes and kickbacks, the practitioners wrote large numbers of prescriptions for patients, most of whom were not diagnosed with cancer, the government alleges.
The indictment also alleges that Kapoor and the six former executives conspired to mislead and defraud health insurers that were reluctant to approve payment for the drug when it was prescribed for non-cancer patients.
The $150 million the company set aside for the matter “represents the company’s best estimate of the minimum liability exposure the company expects to pay over five years in connection with this matter,” Insys said in a statement. “The ultimate amount of potential liability may materially exceed the $150 million.”
The company added that the government hasn’t accepted management’s offer and there can be no assurance that it will.