- YouTube, CNBC
- Three employees at the Department of Veterans Affairs have been indicted on charges they accepted bribes from the pharmaceutical firm MiMedx.
- The company is helmed by the flamboyant “Trump of Georgia,” Pete Petit, who chaired the president’s finance committee in the state.
- Petit has been at war with Wall Street short sellers for months, suing them for alleging accounting malfeasance at the company.
Three employees at the Department of Veterans Affairs have been indicted on charges they accepted bribes from a small pharmaceutical company called MiMedx Group.
The company is helmed by Trump campaign finance chair and so-called Trump of Georgia, Pete Petit. He’s known for flying planes and hanging out with former Health and Human Services Secretary Tom Price. The Georgia State University football field was named for him after he gave a $10 million gift to the university to support the athletics program. He’s also been on a vicious knockdown, drag-out crusade against Wall Street critics who have alleged malfeasance at the company for months.
The VA employees – Donna Becker, Marcela Dolores Ferrer, and Garol Guardiola – were indicted on charges they accepted thousands of dollars from MiMedx for pushing its wound-care product at the VA and committing healthcare fraud. They also got vacations, free meals, and stock in the company, according to the indictment.
In a statement, MiMedx simply said that the company itself has not been indicted.
“The Company is actively reviewing the information outlined in the indictment. Furthermore, the Company has fully cooperated with the VA Office of Inspector General, which conducted the investigation in this matter. The Company will continue to cooperate fully with all legal and regulatory authorities.”
The company has yet to respond to Business Insider’s request for additional comment.
Live by the sword
MiMedx turns human placenta into wound-healing treatment, and, according to Piper Jaffray, it enjoys the largest share of the wound-healing market in the US, at 27% of sales. Its shares were breaking records until August.
But last year UBS told clients the company’s products were not as effective as the company said, and it faced serious competition that investors were not yet considering. At the time, UBS said it thought shares were worth about 40% of their current stock price. They’ve lost 42% this year.
Short sellers on Wall Street have alleged far worse, setting off a legal war. One of the reports that set off this battle was published on a website called Aurelius Value. It lists no author. It highlighted claims of “channel stuffing” – in this case, the practice of using distributors to artificially inflate sales – filed in a public whistleblower lawsuit in 2016. Another report, also anonymously authored, from a shop called Viceroy, suggested the US Securities and Exchange Commission is looking into the claims, something that’s also claimed in another lawsuit against the company.
So Petit went on a rampage, suing random shops on Wall Street to try to smoke out the identities of the people behind the reports. He attacked them online; the shorts attacked back. When Business Insider wrote a story about this messy situation, Petit declined to address any of the specifics and instead took to calling me a “shill” in a colorful letter that you can find here. I do often speak to short sellers, and sometimes give air to their ideas when I think they’re smart. I don’t know who Aurelius and Viceroy are, though.
The SEC is, by the way, investigating MiMedx for possible channel stuffing. The Justice Department is also looking into its business practices, according to Bloomberg.
Business Insider sent MiMedx a bunch of additional questions about the investigation. Back in September, MiMedx said it was not the target of any investigation. Again, in its statement this week, it said that it had not been indicted. We asked MiMedx if Petit knew of any wrongdoing at the company, if it was in fact the target of an investigation at this point, and if it’s possible that more people from the VA may be indicted for a similar relationship with MiMedx.
We have yet to hear back from the company.