definitely changed forever my view on the fairness of the U.S. legal sys-
tem.
I pleaded guilty on May 9, 2013, and awaited sentencing. Now you're
back to where this long tale began. I do want to say that nothing posi-
tive came out of that day when we all were sentenced. I felt no anger
or bitterness, only sadness. The 3 other individuals sentenced that day
received longer sentences — much longer in a couple of cases.
ArthroCare's CEO and CFO were sentenced to 20 years and 10 years
in prison, respectively. I felt only deep sorrow. For the most part, I
enjoyed working with these people and I thought they were my
friends. I still believe that each of them is basically a good person who
went off the rails somewhere.
Don't tolerate cutting corners
When ArthroCare finally restated its earnings, it announced a reduc-
tion of $72.3 million in revenue. The vast majority of this reduction
was due to reclassifying service and marketing fees as discounts,
reversing DiscoCare receivables from PI attorneys and health insur-
ance plans, and changing the accounting for the DiscoCare acquisi-
tion. The ArthroCare finance group determined and the company's
external auditors approved the original accounting for these transac-
tions. I had no input into the accounting treatment of these transac-
tions.
This is not to say I did not break the law. I take full responsibility for
the things I did. I gave direction to sales reps and put promotions in
place that resulted in revenue that shouldn't have been recognized. I
authorized shipments of a new type of SpineWand and shipments to
meet contractual quotas that shouldn't have been recognized as rev-
enue. I either knew or suspected that these transactions were not
legal. And I know that the fact that they were approved or initiated by
7 8
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
B r e a k i n g B a d
