FROM: U.S. ENVIRONMENTAL PROTECTION AGENCY
EPA Stops the Importation of Short-Chain Chlorinated Paraffins as Part of Settlement with INEOS
WASHINGTON – The U.S. Environmental Protection Agency (EPA) announced a settlement with INEOS Chlor Americas, Inc., based in Wilmington, Del., to resolve violations of the Toxic Substances Control Act (TSCA). INEOS allegedly imported various chain-length chlorinated paraffins into the United States without providing the required notice to EPA. Under this settlement INEOS has ended the importation of short-chained chlorinated paraffins into the United States.
"EPA’s short-chained chlorinated paraffin action plan, part of the Administrator’s priority for Assuring the Safety of Chemicals, identified significant environmental risks for these chemicals," said Cynthia Giles assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "With this settlement we have removed all known major sources of this chemical from the marketplace. We will continue to coordinate with US Customs and Border Protection to prevent future illegal importation of these chemicals."
Short-chained chlorinated paraffins (SCCPs), used as lubricants and coolants for metal working and as plasticizers and flame retardants in plastics, are persistent, bioaccumulative, and toxic to aquatic life. Even relatively small releases of these chemicals from individual manufacturing, processing, or waste management facilities have the potential to accumulate over time to higher levels and have been detected in wildlife and humans.
INEOS has also agreed to provide the notices required by TSCA Section 5 to the EPA for any medium or long-chain chlorinated paraffin it wishes to import after the date of lodging of the decree. Submission of these notices by INEOS will enable EPA to identify and evaluate the health and environmental effects, exposures, releases, and risks posed by these chemical substances. If appropriate, EPA will initiate an action under TSCA section 5 to address any unreasonable risks posed by the chlorinated paraffins.
INEOS will pay a $175,000 civil penalty.
The proposed settlement, lodged in the U.S. District Court for Delaware, is subject to a 30-day public comment period and final court approval.
Saturday, August 25, 2012
Friday, August 24, 2012
U.S. MARSHALS SEIZED FOOD PRODUCTS AFTER INSPECTORS FOUND RODENT INFESTATION
FROM: U.S. FOOD AND DRUG ADMINISTRATION
For Immediate Release: Aug. 22, 2012
FDA: U.S. Marshals seize food products at Fremont, Calif., warehouse
Agency acts to prevent food distribution from rodent-infested facility
U.S. Marshals have seized food products stored in a Fremont, Calif., company’s warehouse after inspectors from the U.S. Food and Drug Administration found widespread and active rodent infestation.
The FDA initiated the seizure of various food products in the warehouse owned by the San Francisco Herb &Natural Food Company on Aug. 21, 2012, under a warrant issued by the U.S. District Court for the Northern of California.
FDA inspectors found significant insanitary conditions throughout the warehouse during a recent inspection, in violation of the Federal Food, Drug, and Cosmetic Act. These conditions included the presence of live and dead rodents in and around food products, and apparent rodent nesting materials in food.
The seized held goods had been under an embargo by the State of California’s Department of Public Health. Those articles of food that were stored in metal and glass containers were exempt from the embargo and the seizure.
"The violations at San Francisco Herb & Natural Food Company, in Fremont, Calif. are widespread and significant," said Dara A. Corrigan, associate commissioner for regulatory affairs. "This prompted the FDA working together with its state partner, the State of California’s Department of Public Health to take these aggressive enforcement actions to protect the health of consumers."
For Immediate Release: Aug. 22, 2012
FDA: U.S. Marshals seize food products at Fremont, Calif., warehouse
Agency acts to prevent food distribution from rodent-infested facility
U.S. Marshals have seized food products stored in a Fremont, Calif., company’s warehouse after inspectors from the U.S. Food and Drug Administration found widespread and active rodent infestation.
The FDA initiated the seizure of various food products in the warehouse owned by the San Francisco Herb &Natural Food Company on Aug. 21, 2012, under a warrant issued by the U.S. District Court for the Northern of California.
FDA inspectors found significant insanitary conditions throughout the warehouse during a recent inspection, in violation of the Federal Food, Drug, and Cosmetic Act. These conditions included the presence of live and dead rodents in and around food products, and apparent rodent nesting materials in food.
The seized held goods had been under an embargo by the State of California’s Department of Public Health. Those articles of food that were stored in metal and glass containers were exempt from the embargo and the seizure.
"The violations at San Francisco Herb & Natural Food Company, in Fremont, Calif. are widespread and significant," said Dara A. Corrigan, associate commissioner for regulatory affairs. "This prompted the FDA working together with its state partner, the State of California’s Department of Public Health to take these aggressive enforcement actions to protect the health of consumers."
Thursday, August 23, 2012
EXECUTIVES ARRESTED FOR ALLEGEDLY INFLATING CORPORATE EARNINGS
FROM: U.S. DEPARTMENT OF JUSTICE
Wednesday, August 22, 2012
Two Former Senior Executives of Arthrocare Corp. Arrested in $400 Million Securities Fraud Scheme
WASHINGTON – Two former senior executives of Austin, Texas-based ArthroCare Corp., a publicly traded medical device company, were arrested this morning in Morristown, N.J. and Orange County, Calif., for their alleged roles in a scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings by tens of millions of dollars, announced Assistant Attorney General Lanny A. Breuer of the Department of Justice’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas. The department said that the loss to the company’s shareholders and the investing public was more than $400 million.
A 16-count indictment was unsealed today in the U.S. District Court for the Western District of Texas against John Raffle, the former senior vice president of strategic business units of ArthroCare and David Applegate, the former senior vice president in charge of ArthroCare’s spine division. Raffle was arrested in Morristown and Applegate was arrested in Orange County.
The indictment, which was originally returned on Aug. 21, 2012, charges Raffle and Applegate with one count of conspiracy to commit wire, mail and securities fraud; four counts of wire fraud; eight counts of mail fraud; and three counts of securities fraud. The indictment also seeks forfeiture of assets held by Raffle and Applegate.
"The indictment unsealed today alleges that these senior corporate executives participated in a scheme to artificially inflate their company’s stock prices, cheating shareholders and the investing public out of hundreds of millions of dollars," said Assistant Attorney General Breuer. "The Criminal Division will continue to vigorously pursue those who defraud American investors."
According to the indictment, between in or about December 2005 through in or about December 2008, Raffle, Applegate and other senior executives and employees of ArthroCare allegedly inflated falsely ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors. According to court documents, Raffle and Applegate determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. Raffle, Applegate and others then allegedly caused ArthroCare to "park" millions of dollars worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter. ArthroCare would then report these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.
According to the indictment, ArthroCare’s distributors agreed to accept shipment of millions of dollars of product in exchange for substantial, upfront cash commissions, extended payment terms and the ability to return product, as well as other special conditions, allowing ArthroCare to inflate falsely its revenue by tens of millions of dollars. ArthroCare did not disclose the conditions of the purported sales to investors.
The indictment further alleges that Raffle, Applegate and others used DiscoCare, a privately owned Delaware corporation, as one of the distributors to cover shortfalls in ArthroCare’s revenue. According to the indictment, ArthroCare shipped product to DiscoCare that far exceeded DiscoCare’s needs at Raffle and Applegate’s direction.
According to court documents, between the fourth quarter of 2005 and the fourth quarter of 2007, ArthroCare reported more than $37 million in revenue in its publicly filed financial statements based on purported sales to DiscoCare. However, during the same time period, DiscoCare’s actual net cash payments to ArthroCare for the products were less than $50,000. Court documents further allege that, to conceal the fact that DiscoCare owed ArthroCare a substantial amount of money on unused inventory, Raffle and Applegate caused ArthroCare to acquire DiscoCare on Dec. 31, 2007.
According to the indictment, in the third quarter of 2007, Raffle and Applegate began a new program at ArthroCare, called "Son of DRS." Under the Son of DRS program, ArthroCare allegedly shipped medical devices from its sports division to its customers free of charge and recorded the revenue once DiscoCare had been invoiced for the product. According to court documents, DiscoCare never was required to pay ArthroCare for any of the product DiscoCare purportedly purchased under the Son of DRS program because ArthroCare acquired DiscoCare before any payments came due. The indictment alleges that, between August and November 2007, Raffle and Applegate caused ArthroCare to falsely report more than $7 million in revenue in its publicly filed financial statements based on purported sales to DiscoCare under this program.
According to court documents, between December 2005 and December 2008, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock. On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share. The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.
Upon conviction, Raffle and Applegate face a maximum prison sentence of five years for the conspiracy charge and 20 years for each count of mail and wire fraud. Raffle and Applegate also face a maximum sentence of 25 years in prison for each securities fraud count.
An indictment is merely a charge, and the defendants are presumed innocent until proven guilty.
The case is being prosecuted by Assistant Chief Benjamin D. Singer and Trial Attorney Henry P. Van Dyck of the Criminal Division’s Fraud Section. This case was investigated by the FBI’s Austin Field Office.
Wednesday, August 22, 2012
Two Former Senior Executives of Arthrocare Corp. Arrested in $400 Million Securities Fraud Scheme
WASHINGTON – Two former senior executives of Austin, Texas-based ArthroCare Corp., a publicly traded medical device company, were arrested this morning in Morristown, N.J. and Orange County, Calif., for their alleged roles in a scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings by tens of millions of dollars, announced Assistant Attorney General Lanny A. Breuer of the Department of Justice’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas. The department said that the loss to the company’s shareholders and the investing public was more than $400 million.
A 16-count indictment was unsealed today in the U.S. District Court for the Western District of Texas against John Raffle, the former senior vice president of strategic business units of ArthroCare and David Applegate, the former senior vice president in charge of ArthroCare’s spine division. Raffle was arrested in Morristown and Applegate was arrested in Orange County.
The indictment, which was originally returned on Aug. 21, 2012, charges Raffle and Applegate with one count of conspiracy to commit wire, mail and securities fraud; four counts of wire fraud; eight counts of mail fraud; and three counts of securities fraud. The indictment also seeks forfeiture of assets held by Raffle and Applegate.
"The indictment unsealed today alleges that these senior corporate executives participated in a scheme to artificially inflate their company’s stock prices, cheating shareholders and the investing public out of hundreds of millions of dollars," said Assistant Attorney General Breuer. "The Criminal Division will continue to vigorously pursue those who defraud American investors."
According to the indictment, between in or about December 2005 through in or about December 2008, Raffle, Applegate and other senior executives and employees of ArthroCare allegedly inflated falsely ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors. According to court documents, Raffle and Applegate determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. Raffle, Applegate and others then allegedly caused ArthroCare to "park" millions of dollars worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter. ArthroCare would then report these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.
According to the indictment, ArthroCare’s distributors agreed to accept shipment of millions of dollars of product in exchange for substantial, upfront cash commissions, extended payment terms and the ability to return product, as well as other special conditions, allowing ArthroCare to inflate falsely its revenue by tens of millions of dollars. ArthroCare did not disclose the conditions of the purported sales to investors.
The indictment further alleges that Raffle, Applegate and others used DiscoCare, a privately owned Delaware corporation, as one of the distributors to cover shortfalls in ArthroCare’s revenue. According to the indictment, ArthroCare shipped product to DiscoCare that far exceeded DiscoCare’s needs at Raffle and Applegate’s direction.
According to court documents, between the fourth quarter of 2005 and the fourth quarter of 2007, ArthroCare reported more than $37 million in revenue in its publicly filed financial statements based on purported sales to DiscoCare. However, during the same time period, DiscoCare’s actual net cash payments to ArthroCare for the products were less than $50,000. Court documents further allege that, to conceal the fact that DiscoCare owed ArthroCare a substantial amount of money on unused inventory, Raffle and Applegate caused ArthroCare to acquire DiscoCare on Dec. 31, 2007.
According to the indictment, in the third quarter of 2007, Raffle and Applegate began a new program at ArthroCare, called "Son of DRS." Under the Son of DRS program, ArthroCare allegedly shipped medical devices from its sports division to its customers free of charge and recorded the revenue once DiscoCare had been invoiced for the product. According to court documents, DiscoCare never was required to pay ArthroCare for any of the product DiscoCare purportedly purchased under the Son of DRS program because ArthroCare acquired DiscoCare before any payments came due. The indictment alleges that, between August and November 2007, Raffle and Applegate caused ArthroCare to falsely report more than $7 million in revenue in its publicly filed financial statements based on purported sales to DiscoCare under this program.
According to court documents, between December 2005 and December 2008, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock. On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share. The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.
Upon conviction, Raffle and Applegate face a maximum prison sentence of five years for the conspiracy charge and 20 years for each count of mail and wire fraud. Raffle and Applegate also face a maximum sentence of 25 years in prison for each securities fraud count.
An indictment is merely a charge, and the defendants are presumed innocent until proven guilty.
The case is being prosecuted by Assistant Chief Benjamin D. Singer and Trial Attorney Henry P. Van Dyck of the Criminal Division’s Fraud Section. This case was investigated by the FBI’s Austin Field Office.
Tuesday, August 21, 2012
DOL SUES TO RESTORE $34 MILLION TO MICHIGAN MANUFACTURER'S PENSION FUNDS
FROM: U.S. DEPARTMENT OF LABOR
US Labor Department sues to restore more than $34 million to 2 worker pension funds of Michigan-based vehicle parts manufacturer
Company chairman, pension manager alleged to have improperly used retirement funds
WASHINGTON— The U.S. Department of Labor has sued to restore more than $34 million in assets to two retirement funds of Michigan-based vehicle parts manufacturer Metavation LLC that allegedly were used in violation of the Employee Retirement Income Security Act.
The department named in its lawsuit George Hofmeister, chairman and director of Metavation, and Bernard Tew, managing director of Tew Enterprises LLC and Bluegrass Investment Management LLC. The latter two companies acted as investment advisers to the two plans. The suit also names Metavation LLC, a subsidiary of Lexington, Ky.-based Revstone Industries LLC.
"Retirees who rely on pension plans should not have to worry about whether these funds are secure," said Secretary of Labor Hilda L. Solis. "That is why those who are entrusted with managing pension funds are held to the highest legal standards and will be held accountable by the Labor Department if they violate that trust."
In 2008, Revstone subsidiary Cerion LLC acquired Metavation LLC, formerly Hillsdale Automotive, and took control of the pension plans. The suit, filed in the U.S. District Court for the Eastern District of Kentucky, is based on the results of an investigation by the Labor Department's Employee Benefits Security Administration that found numerous ERISA violations beginning in February 2009, just three months after Hillsdale had been acquired.
The violations include prohibited loans to related companies within the Revstone Industries corporate family, prohibited use of plan assets for the purchase and lease of employer property, prohibited purchase of customer notes from companies within Revstone Industries, prohibited purchase of investments from adverse parties, payment of excessive fees to services providers, and the improper allocation of income and expense payments between the pension plans. The suit alleges that, as a result of the defendants engaging in these prohibited transactions, approximately $12.1 million from the Hillsdale Salaried Pension Plan and approximately $22.5 million from the Hillsdale Hourly Pension Plan were improperly used.
Together, the plans report having assets now valued at approximately $36 million. As of November 2010, there were 367 participants in the salaried plan and 1,161 participants in the hourly plan, the latest data available.
"The Department of Labor is committed to protecting the assets of workers' pension plans from misuse by plan fiduciaries and service providers," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "These workers are relying on their money being there for them when they retire. Our aim is to make this situation right."
The department's suit asks the court to order the defendants to correct all prohibited transactions related to the loans and use of plan assets, restore any losses to the plans (including interest) resulting from fiduciary breaches and transfer to the plans all gains resulting from their ERISA violations. The suit also asks the court to remove the defendants as fiduciaries of the plans and prohibit them from serving as fiduciaries or service providers in the future to any plan covered by ERISA. Finally, the suit seeks the appointment of an independent fiduciary to administer the plans.
Revstone Industries LLC designs, engineers and manufactures components for use in the transportation and heavy truck industries. Revstone Industries wholly owns Cerion LLC, which wholly owns Metavation LLC. George Hofmeister also is the chairman of Revstone Industries.
US Labor Department sues to restore more than $34 million to 2 worker pension funds of Michigan-based vehicle parts manufacturer
Company chairman, pension manager alleged to have improperly used retirement funds
WASHINGTON— The U.S. Department of Labor has sued to restore more than $34 million in assets to two retirement funds of Michigan-based vehicle parts manufacturer Metavation LLC that allegedly were used in violation of the Employee Retirement Income Security Act.
The department named in its lawsuit George Hofmeister, chairman and director of Metavation, and Bernard Tew, managing director of Tew Enterprises LLC and Bluegrass Investment Management LLC. The latter two companies acted as investment advisers to the two plans. The suit also names Metavation LLC, a subsidiary of Lexington, Ky.-based Revstone Industries LLC.
"Retirees who rely on pension plans should not have to worry about whether these funds are secure," said Secretary of Labor Hilda L. Solis. "That is why those who are entrusted with managing pension funds are held to the highest legal standards and will be held accountable by the Labor Department if they violate that trust."
In 2008, Revstone subsidiary Cerion LLC acquired Metavation LLC, formerly Hillsdale Automotive, and took control of the pension plans. The suit, filed in the U.S. District Court for the Eastern District of Kentucky, is based on the results of an investigation by the Labor Department's Employee Benefits Security Administration that found numerous ERISA violations beginning in February 2009, just three months after Hillsdale had been acquired.
The violations include prohibited loans to related companies within the Revstone Industries corporate family, prohibited use of plan assets for the purchase and lease of employer property, prohibited purchase of customer notes from companies within Revstone Industries, prohibited purchase of investments from adverse parties, payment of excessive fees to services providers, and the improper allocation of income and expense payments between the pension plans. The suit alleges that, as a result of the defendants engaging in these prohibited transactions, approximately $12.1 million from the Hillsdale Salaried Pension Plan and approximately $22.5 million from the Hillsdale Hourly Pension Plan were improperly used.
Together, the plans report having assets now valued at approximately $36 million. As of November 2010, there were 367 participants in the salaried plan and 1,161 participants in the hourly plan, the latest data available.
"The Department of Labor is committed to protecting the assets of workers' pension plans from misuse by plan fiduciaries and service providers," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. "These workers are relying on their money being there for them when they retire. Our aim is to make this situation right."
The department's suit asks the court to order the defendants to correct all prohibited transactions related to the loans and use of plan assets, restore any losses to the plans (including interest) resulting from fiduciary breaches and transfer to the plans all gains resulting from their ERISA violations. The suit also asks the court to remove the defendants as fiduciaries of the plans and prohibit them from serving as fiduciaries or service providers in the future to any plan covered by ERISA. Finally, the suit seeks the appointment of an independent fiduciary to administer the plans.
Revstone Industries LLC designs, engineers and manufactures components for use in the transportation and heavy truck industries. Revstone Industries wholly owns Cerion LLC, which wholly owns Metavation LLC. George Hofmeister also is the chairman of Revstone Industries.
Monday, August 20, 2012
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