Spectranetics reaches agreement with former executives to limit legal expenses
Spectranetics Corp. told stockholders Thursday it has reached agreements with two former executives now on trial in Denver that put a limit of $2.43 million on further legal expenses for which Spectranetics will reimburse the two.
The Colorado Springs-based medical laser manufacturer reached the agreement with former CEO John Schulte and Trung Pham, the company’s former business development manager, in exchange for agreeing not to seek repayment of their legal fees if they are found guilty of charges of import violations and defrauding the federal goverment. The limits of $1.9 million for Schulte and $525,000 for Pham apply to legal fees and other expenses incurred in their cases since Jan. 1, including any unsuccessful appeals. Schulte’s agreement allows either side to void the agreement if there is a mistrial.
Spectranetics disclosed the agreements, reached Monday, in a filing with the Securities and Exchange Commission. The filing also disclosed that the company increased by $2 million in the fourth quarter the amount it has set aside for legal expenses of Schulte, Pham and Obinna “Larry” Adighije, former vice president of business development. No agreement limiting Adighije’s expenses has been reached, the company said, because U.S. District Court Judge Wiley Daniel in November delayed Adighije’s trial until Schulte’s and Pham’s trial has been completed.
The company previously set aside $6.5 million for legal expenses of the three former executives and had spent $3.2 million through the end of last year.
Schulte’s and Pham’s trial began Monday and is expected to last up to four weeks.
If convicted, Schulte, Pham and Adighije could each face up to 20 years in prison and up to $250,000 in fines on the three most serious charges; the remaining charges carry penalties ranging from a maximum of three to five years in prison and up to $250,000 in fines.
Spectranetics paid $5 million in December 2009 to the U.S. Department of Justice to resolve allegations that the company illegally imported and marketed unapproved medical devices stemming from a September 2008 raid of its headquarters by agents from the U.S. Food and Drug Administration and Immigrations and Customs Enforcement.
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