Ex-Acclarent Execs Convicted on Misdemeanors in Federal Trial
Posted on July 21, 2016 by Medtech[y] Staff
The six week trial of former Acclarent executives ended in misdemeanor convictions by a U.S. jury in connection with distributing adulterated and misbranded medical devices.
Former Acclarent Chief Executive Officer, William Facteau, and Vice President of Sales, Patrick Fabian, were each convicted by a jury on 10 misdemeanor counts of misbranding and adulteration under the strict liability provisions of the Food, Drug & Cosmetic Act, which do not require proof of wrongful intent.
The two executives, however, were acquitted on all 14 of the most serious felony counts of wire fraud and conspiracy, finding they did not act with intent to defraud or mislead.
According to the Department of Justice Press Release, the charge of violating the Food, Drug and Cosmetics Act provides for a sentence of no greater than one year in prison on each count, one year of supervised release and fine of $100,000 or twice the gross gain or loss.
The charges revolve around the Acclarent Stratus Microflow Spacer, originally 510(k) approved to be used as a sinus spacer with saline.
Microflow Spacer 510(k) Summary:
The Department of Justice claim both Facteau and Fabian launched the product intending it to be used as a steroid delivery device which is outside the scope of the 510(k) approval.
By selling the device with steroids instead of saline, the Department of Justice argued the executives drove up Acclarent revenues and stock valuation by illegally marketing the device, thus making Acclarent more attractive as an acquisition target of for an IPO. Acclarent was ultimately sold to Johnson & Johnson for $785 million in 2010.
Acclarent Relieva Microflow Spacer in Action:
Steptoe’s Reid Weingarten, lead lawyer for Mr. Facteau, and Frank Libby of Libby Hoopes, PC, lead lawyer for Mr. Fabian, immediately informed the court that the defendants would move to set aside the misdemeanor charges on multiple grounds.
Mr. Weingarten said: “I am grateful that the jury exonerated Mr. Facteau of all charges requiring criminal intent and affirmatively concluded that the case did not involve false or misleading statements. It is difficult to understand how someone in America could be convicted of even misdemeanor crimes without a finding of intentional wrongdoing. We will fight vigorously to overturn these few remaining charges and will not rest until Mr. Facteau is completely vindicated.”
Mr. Libby added: “After five years of investigation and a six week trial, the jury flatly rejected the government’s core fraud and conspiracy theories. We’re completely confident that, during the proceedings to come, the remaining ‘no wrongful intent’ misdemeanor counts of conviction will meet the same fate.”
We will update this post as more information becomes available.