Ex-Valeant, Philidor execs face criminal charges
Two former pharmaceutical executives are facing federal criminal charges over what prosecutors described as a fraud and kickback scheme that netted each millions of dollars from drugmaker Valeant Pharmaceuticals.
Former Philidor Rx Services CEO Andrew Davenport and former Valeant executive Gary Tanner were charged Thursday with multiple counts, including wire fraud and money laundering, according to the Department of Justice.
During their alleged scheme, the pair exchanged secret emails
evoking images from Butch Cassidy and the Sun
dance Kid, with Davenport predicting they would “ride into the sunset” together, according to a federal complaint.
“As of today, that game is up,” Preet Bharara, U.S. attorney for the Southern District of New York, told reporters. “They will not be riding into the sunset.”
Instead, the FBI said Davenport was arrested Thursday at his Philadelphia residence, and Tanner was arrested at his home in Phoenix.
The FBI accused Davenport of paying Tanner about $10 million in kickbacks, plus promises of additional potential payments, for helping Davenport acquire more than $40 million from Valeant. The conspiracy spanned from about December 2012 through September 2015, according to the government.
The conspiracy included “others, known and unknown,” FBI special agent Ryan Redel said in the complaint, without giving any names. Bharara said the investigation is continuing and could lead to more charges.
Contact information for attorneys representing the defendants was not immediately available Thursday.
The indictment deepened an already turbulent period for Va-
leant, which has acknowledged it was facing a criminal probe and other investigations over its accounting and controversial pricing practices. And it marks a new low point for Philidor, a mail-order pharmacy business that went out of business in January.
Valeant shares briefly tumbled more than 5% Thursday before recovering.
“The counts issued today include allegations that the charged parties engaged in actions to defraud Valeant as a company,” Valeant said in a statement, noting that it had not been charged as a company and that its current employees had not been indicted. “Valeant continues to cooperate with all relevant authorities in this matter.”
Bharara said Davenport and Tanner “illegally converted Valeant shareholders’ money into their own personal nest eggs.”
Tanner served as executive director of commercial analytics and then senior director of Valeant’s “access solutions team” during his tenure at the company. Investigators accused him of leveraging his position to improperly promote Philidor to Valeant executives. Davenport used portions of his share of the proceeds to buy securities, pay down a mortgage and contribute $50,000 for installation of a custom wine cellar, according to the FBI.
“The kickback payments were made in secret and were laundered through a series of shell companies and transactions designed to conceal the illicit source, nature, ownership and control of the funds,” according to the FBI complaint.
Counts “include allegations that the charged parties engaged in actions to defraud Valeant as a company.” Valeant, in a statement