Accounting & Tax

SEC Charges Former Endocare CFO

The SEC alleges that Endocare's former CFO and CEO overstated income over two years, including one quarter in which reported revenue was inflated b...
Stephen TaubAugust 11, 2006

The Securities and Exchange Commission has filed civil fraud charges against the former chief financial officer and former chief executive officer of medical-device company Endocare, asserting they “significantly overstated” income, according to Bloomberg.

John V. Cracchiolo, the former finance exec, and Paul W. Mikus, the former CEO of Endocare, were accused of overstating revenue over a two-year period, including by as much as 33 percent in one quarter, according to the report, citing the SEC.

Cracchiolo was named CFO and COO in July 2001, replacing William Hughes. Cracchiolo had been a president at QuadraMed Corp. before joining Endocare.

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“Endocare’s egregious and widespread fraud pervaded the executive suite,” said Randall R. Lee, director of the SEC’s Pacific regional offices in Los Angeles, in a statement.

Last month the company agreed to pay $750,000 to settle fraud charges for engaging in a widespread accounting fraud and then making false and misleading public statements about the results of an internal investigation.

At the time, Endocare’s senior vice president of sales, Kevin Quilty, and the former president of an Endocare subsidiary, Jerry W. Anderson, agreed to settle commission charges for recordkeeping and internal-controls violations, and — in the case of Quilty — for aiding and abetting Endocare’s reporting violations.

“This is just a continuation of what was settled with the company, and the SEC has taken the next step of filing charges with these individuals who have long been separated from the company,” Endocare spokesman Matt Clawson told Bloomberg about the latest charges. He also told the wire service that neither the SEC nor the Justice Department is investigating the company.

Endocare said in a regulatory filing on Tuesday that it received a subpoena from the SEC staff requesting option-related information related to certain former officers and directors.