Former Spectranetics (NSDQ:SPNC) CEO John Schulte’s 2012 conviction on a single count of lying to federal investigators survived his appeal to an appeals court, meaning his sentence of a year’s probation will stand.
Schulte was convicted in March 2012 for his role in the allegedly illegal importation of medical devices for a clinical trial and sentenced later that year.
In January, the U.S. Appeals Court for the 10th Circuit denied Schulte’s appeal, shooting down his argument that his statements were not aimed at misleading an FDA investigation into the case, according to court documents. A jury acquitted Schulte of 11 other charges including conspiracy to defraud the federal government.
Spectranetics agreed to pay $5 million and admitted responsibility late in 2009 to settle its portion of the case, after federal agents raided its Colorado Springs headquarters in 2008. Schulte resigned a few weeks after the raid and was indicted in 2010, along with 3 other defendants – former vice president of business development Obinna "Larry" Adighije, former business development manager Trung Pham and consultant Hernan Ricuarte.
Pham was acquitted of the 5 charges against him, including conspiring to defraud the federal government and smuggling unapproved medical devices into the country; prosecutors later dropped all 5 charges against Adighije. Ricuarte pleaded guilty in August 2012 to a single count of concealing a felony.
Schulte argued that in his conviction and subsequent sentencing "the government failed to prove both his intent to supply false information and the materiality of the statements to the government’s investigation," according to the documents. The 10th Circuit disagreed, affirming the conviction in a Jan. 21 ruling. The appeals court denied Schulte’s bid for a re-hearing Feb. 18, according to the documents.
"Given Schulte’s position in the company and his ability to explain the purpose and use of the devices prior to FDA approval, the jury was provided sufficient evidence to find, beyond a reasonable doubt, Schulte’s statements could have influenced the agency," according to the documents. "The FDA, charged with protecting citizens’ health, was trying to ascertain the number and type of unapproved devices placed into human patients. Schulte’s statements misdirected the focus of the investigation from a company policy soliciting clinical trials to the possible, but unknown activities of individual employees."
