Accounting Fraud

June 2, 2014

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

February 3, 2015

Judge Cormac J. Carney of the U.S. District Court for the Central District of California entered an emergency restraining order freezing assets and prohibiting the destruction or concealment of books and records of defendants Christopher Valois, Cynthia Wong, and their companies, Bertram Trade LLC and Churchhill Commodities Trading LLC, all of Orange County California.  The judge set a hearing date for February 12, 2015.  CFTC

April 28, 2014

The CFTC obtained a Consent Order against Tunney & Associates, P.C, an accounting firm with offices in Hammond, Indiana and Orland Park, Illinois, and Michael Tunney, its sole owner and a certified public accountant, requiring T&A and Tunney jointly to pay a $100,000 civil penalty for violating CFTC Regulations when conducting audits for The Linn Group, a CFTC-registered Futures Commission Merchant.  CFTC