Two former executives of Arthrocare Corporation have been sentenced to prison for their leading roles in a $750 million securities fraud scheme.
Former CEO Michael Baker, 55, was sentenced to 20 years in prison while former CFO Michael Gluk, 56, was sentenced to 10 years in prison.
The scheme, which took place between 2005 and 2009, involved artificially inflating sales and revenue through sham transactions with distributors.
Arthrocare’s distributors were bribed into accepting millions of dollars of excess inventory, which the company then fraudulently reported as sales in its quarterly and annual filings.
The scheme ultimately caused investors to lose approximately $756 million as Arthrocare’s stock price was artificially inflated.
US District Judge Sam Sparks imposed the sentences, calling the scheme a ‘tale of greed’. ‘The CEO, CFO and two vice presidents of Arthrocare ran a successful business, but they wanted more,’ he said.
The FBI’s Special Agent in Charge Christopher H. Combs also weighed in, saying ‘This scheme of betrayal and deceit was carried out by the defendants without regard to the deep-reaching and irreparable harm their actions caused to thousands of victims.’
The sentencing brings an end to a lengthy investigation, with Baker and Gluk being convicted by a jury in 2014.
Two other former Arthrocare executives, John Raffle and David Applegate, also pleaded guilty to their roles in the scheme and were sentenced to prison terms.
The scheme highlights the importance of corporate accountability and the need for strict penalties for those who engage in fraud and other white-collar crimes.
Related Federal Cases
🔒 Get the grimiest stories delivered weekly. Subscribe free →
Browse More
