Former ArthroCare (NSDQ:ARTC) CFO Michael Gluk, convicted for his part in a scheme estimated to have cost investors more than $750 million and sentenced to 10 years in prison, yesterday joined former ArthroCare CEO Michael Baker’s motion for a new trial.
Baker was sentenced August 29 to 20 years and former ArthroCare CFO Michael Gluk drew 10 years from Judge Samuel Sparks of the U.S. District Court for Western Texas.
Federal prosecutors sought a 30-year sentence for Baker and a 20-year term for Gluk. The duo was indicted last year on 17 counts of conspiracy to commit fraud for their alleged roles in running a scheme designed to defraud investors. After their convictions, Baker and Gluk asked Sparks to grant their motions for acquittal (Baker also asked for a new trial). Sparks declined, ruling that neither defendant showed that the testimony and evidence in the trial was not credible. The judge also ordered the pair to repay $22.2 million in illicit profits and sentenced them to 5 years of supervision after their terms are served.
Last month Baker argued that he’s entitled to a new trial because a court security guard excluded of members of Baker’s and Gluk’s families and the general public on the 1st day of jury selection.
“On that morning, members of the public – including the families of Mr. Baker and co-defendant Michael Gluk – who wished to attend the voir dire of prospective jurors in this matter, were excluded from the courtroom during the entirety of the jury selection process on the ground that all available seats were required for the seating of prospective jurors," Baker claimed in court documents. "In Presley v. Georgia, the Supreme Court held that the exclusion of members of the public from the jury selection process in a criminal trial constituted structural error, requiring the setting aside of the defendant’s resulting conviction without any further showing of prejudice."
Yesterday, Gluk filed a joinder, seeking to be added to Baker’s motion for a new trial along the same grounds. Regardless of whether his conviction is overturned, Gluk agreed to forfeit some $728,000, according to the documents.
But federal prosecutors countered that there were, in fact, members of the public allowed into the courtroom that day, providing affidavits from 4 "members of the public who were present throughout the jury-selection process," according to court documents.
"Baker is demonstrably wrong," the prosecutors argued. "The record also clearly reflects that the court did not close the courtroom. The court advised all parties that seating would be limited and then ascertained, on the record, whether there were sufficient space to accommodate all members of the public present in the courtroom just before ushering in the prospective jurors. In response to the court’s inquiries about available seating for members of the public, the courtroom security officer even brought a member of the public into the well of the courtroom to be seated in order to accommodate all members of the public who were present at the time. All of this occurred in the presence of no less than 7 attorneys who represented Baker."
Furthermore, the prosecutors wrote, Baker and his lawyers never spoke up during the trial about his and Gluk’s family members being excluded and waited 6 months to raise an objection with the court.
Baker rebuffed the prosecutors’ counter-argument, claiming that the 4 "members of the public" were lawyers for prosecution witnesses, according to the documents.
"The government does not challenge the core factual predicate of Mr. Baker’s motion: that his family members, and those of his codefendant Gluk, were barred by court personnel from being present in the courtroom during the voir dire of prospective jurors. Rather, the government contends that exclusion did not violate Baker’s public trial rights … because the courtroom was not ‘closed,’ in that other members of the public, specifically, 4 lawyers for prospective prosecution witnesses, were present during jury selection," Baker argued. "That contention is demonstrably incorrect because: (1) attorneys for witnesses are not members of the ‘public,’ as that term is defined for 6th Amendment purposes; and (2) given the preferential treatment attorneys representing government witnesses were accorded, their presence in the courtroom did not cure and may have aggravated the constitutional violation worked by the exclusion of the defendants’ family members."
In May 2013, ex-executive David Applegate pleaded guilty to the fraud charges; later that month former co-worker John Raffle denied his involvement but later changed his plea to guilty. Raffle was sentenced to serve 6 years and 8 months in prison followed by 3 years of supervised release, according to a press release, while Applegate was sentenced to a 5-year term and 3 years of supervised release.
Early this year ArthroCare, which was acquired for $1.7 billion by Smith & Nephew (FTSE:SN, NYSE:SNN), agreed to pay a $30 million fine and enter a deferred prosecution deal to settle its part in the fraud case.