A federal jury convicted Michael Baker and Michael Gluk, the former CEO and former CFO of Texas-based medical device manufacturers ArthroCare Corp., for orchestrating a fraud scheme that resulted in shareholder losses of over $400M. Evidence at trial demonstrated that Baker and Gluk masterminded a scheme to artificially inflate sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors beginning in 2005 and continuing until 2009. Baker, Gluk and other ArthroCare employees determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. ArthroCare then reported these shipments as sales enabling the company to meet or exceed internal and external earnings forecasts. DOJ
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