NEW YORK (Reuters) - Two former executives of biotech company MiMedx Group Inc (MDXG.PK) were criminally charged on Tuesday with fraudulently inflating the company’s revenue.
Former MiMedx Chief Executive Parker Petit and former Chief Operating Officer William Taylor were charged with securities fraud and conspiracy in an indictment in Manhattan federal court. They were expected to make an initial court appearance in Atlanta later in the day.
“Pete Petit adamantly denies the charges leveled against him today, and he will vigorously defend himself in court,” Petit’ s lawyer, Eric Bruce, said in a statement.
“Mr. Taylor did not commit these alleged offenses,” Taylor’s lawyer, Bill Weinreb, said in a statement. “He always acted in the best interests of MiMedx’s customers, employees and shareholders and served the company for nearly 10 years with dedication and integrity.”
MiMedx could not immediately be reached for comment.
Prosecutors said that in 2015, Petit and Taylor took part in a scheme to inflate reported revenue to make it appear that the MiMedx, which sells biologic products including skin grafts and amniotic fluid, had met its public revenue targets.
They used sham consulting agreements and other means to induce distributors to agree to buy product that they later intended to return, prosecutors said. In total, according to prosecutors, they inflated revenue by about $9.5 million.
Petit and Taylor resigned from MiMedx in July 2018. In September 2018, the Marietta, Georgia-based company announced that an internal investigation had found the former executives engaged in misconduct.
The most serious charge in the criminal case carries a maximum prison sentence of 20 years. Petit and Taylor are also facing a related civil lawsuit from the U.S. Securities and Exchange Commission.
Reporting by Brendan Pierson in New York; Editing by Tom Brown and Steve Orlofsky