Judge lifts bail, travel restrictions on ex-Acclarent execs

A federal judge in Boston this week lifted the bail and travel restrictions imposed on a pair of former Acclarent executives who were acquitted of felony fraud charges in July.

Former CEO William Facteau and ex-sales vice president Patrick Fabian were convicted on 10 misdemeanor counts of “introducing adulterated and misbranded medical devices into interstate commerce.” Facteau is now chairman, president & CEO of EarLens; Fabian hired on as chief commercial officer at NxThera in 2014, but is no longer listed in the executive roster on the company’s website.

Fabian and Facteau, who have asked Judge Allison Burroughs for acquittals or new trials, last month asked Burroughs to lift the bail and travel restrictions. Facteau initially put up a $5 million bond backed by a lien on his house, which was later changed to a $1 million lien on the home; he was also required to surrender his passport and travel only in northern California and to Boston for the trial. Fabian’s travel was also restricted to the U.S. and he put up a $500,000 unsecured bond, according to court documents.

Burroughs ruled August 30 that neither man posed a flight risk, given their bids for acquittal.

“To date, both defendants have been fully compliant with the conditions of their release and have dutifully appeared for all required court appearances. Neither has attempted to flee or evade prosecution. Furthermore, the court finds it extremely unlikely that either defendant would attempt to flee the jurisdiction at this point in time. Notably, both defendants have been acquitted of all felony charges, and they are diligently pursuing post-trial motions for acquittal on their misdemeanor convictions. In addition, both Mr. Facteau and Mr. Fabian are gainfully employed in the United States and have strong family and community ties to their respective places of residence,” she wrote.

“Further, the court finds that the travel restrictions previously imposed on the defendants are no longer necessary to assure the defendants’ appearance. Moreover, both defendants have demonstrated that these travel restrictions are interfering with their business travel. Therefore, the court hereby lifts the release conditions to the extent that they restrict defendants’ travel. As of the date of this Order, both defendants are free to travel domestically and internationally. The court further orders that both Defendants’ passports be returned to them,” Burroughs wrote.

The misdemeanor convictions stemmed from the Relieva Stratus sinus dilation device; prosecutors alleged that Facteau and Fabian launched Relieva Stratus intending it to be used as a steroid delivery device, even after the FDA had specifically refused Acclarent’s request to clear it as a drug-delivery device without further regulatory submissions.

A charge of violating the Food, Drug & Cosmetics Act has a maximum sentence of 1 year in prison for each count, 1 year of supervised release and a fine of $100,000 or twice the gross gain or loss, according to the Massachusetts attorney general’s office.

Prosecutors originally brought the conspiracy and fraud charges against Facteau and Fabian in April 2015, accusing them 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.”

Johnson & Johnson (NYSE:JNJ) subsidiary Ethicon paid $785 million for Acclarent back in 2010. Prosecutors said Facteau pulled down about $30 million from the Ethicon-Acclarent merger; Fabian’s take was about $4 million, they alleged.

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