Federal prosecutors last week leveled conspiracy and fraud charges against 2 former executives of Acclarent for an alleged off-label marketing scheme for the Relieva Stratus microflow spacer.
Former Acclarent CEO William Facteau and ex-sales vice president Patrick Fabian are accused of seeking to "quickly develop and market products to create a projected revenue stream that would make Acclarent an attractive target for either an initial public offering or acquisition," according to the U.S. Justice Dept. Johnson & Johnson (NYSE:JNJ) subsidiary Ethicon paid $785 million for Acclarent back in 2010.
Facteau is now chairman, president & CEO of EarLens. Fabian is the chief commercial officer for NxThera. The pair each were indicted on 1 count of conspiracy, 3 counts of securities fraud, 4 counts of wire fraud and 10 counts of introducing adulterated or misbranded medical devices into interstate commerce, the Justice Dept. said.
Facteau and Fabian allegedly marketing the Relieva Stratus device, designed to maintain an opening in the sinus, as a steroid-delivery product, despite the FDA’s refusal to clear the device for steroid delivery, according to the feds.
Each faces maximum sentences of 20 years in prison for each wire and securities fraud count, 5 years for the conspiracy count and 3 years for each FDCA violation, followed by a term of supervised release and a $250,000 fine or twice the gross gain, according to the Justice Dept.
Prosecutors said Facteau pulled down about $30 million from the Ethicon-Accenture merger; Fabian’s take was about $4 million, they said.