Prison terms were given to two former ArthroCare executives for a fraud scheme that eventually cost shareholders $750 million, according to an FBI report.
Former CEO Michael Baker and CFO Michael Gluck were sentence to 20 years and 10 years in prison, respectively, for their role in the fraud scheme. An additional two former vice presidents received jail time after it was discovered the company "cooked the books" to meet and exceed expectations on Wall Street.
The executives convinced distributors to purchase more products than they needed so company sales and revenue appear boosted. In ArthroCare's case, this occurred between 2005 and 2009. Distributors received a fee for taking extra product, or given generous payment terms. The company also purchased on of its distributors to avoid regulatory reporting requirements, according to the report.
The case was open in 2011 and the trial was held in June 2014.
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