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O U T P A T I E N T S U R G E R Y M A G A Z I N E O N L I N E | A U G U S T 2 0 1 5
To Our Readers David Applegate is currently serving a 5-year sentence at Taft
(Calif.) Correctional Institute for his role in a massive accounting fraud. He was a senior
vice president at ArthroCare, a publicly traded medical device company. Along with
other executives, he participated in what is referred to as channel stuffing, which is
when you ship more product to distributors than they need in order to inflate revenue
and profit. Essentially, they lied to investors.
We invited Mr. Applegate to share his story with the readers of Outpatient Surgery
Magazine in the hopes that you'll draw valuable lessons from it. He agreed, writing his
account from prison and e-mailing us a few paragraphs at a time. For him, the process
was both painful and cathartic. For you, we hope it's an enlightening look at the indus-
try in which you work.
"I know what I did was wrong and I accept full responsibility for my actions," says
Mr. Applegate. "Although it would have been difficult, I could have walked away
from ArthroCare at any time, but I chose not to. But the reality is that I did not make
any money from this fraud. Usually greed is the motivation in these types of cases,
but it was not for me. In fact, none of my friends and colleagues could believe that I
was indicted — and many said I was one of the most honest people they knew. So
what happened that made me go off the rails this one time? I do not blame my par-
ents, personality or life experiences for the decisions I made, but I have been explor-
ing the impact each of these has had. My hope is the lessons I have learned will
help others avoid my fate." — The Editors
of 24 to 30 months was likely. But under my plea agreement, a sen-
tence of up to 10 years in prison was possible. I never imagined I'd be
in the position of hoping for a 30-month prison sentence. How did I
get here? Ten years before I was a very successful medical device
sales and marketing executive. I was vice president and general man-
ager of the Spine Business Unit at ArthroCare, a high-growth compa-
ny and a Wall Street darling.
B r e a k i n g B a d
