U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 22116 / October 6, 2011

Accounting and Auditing Enforcement Release No. 3326 / October 6, 2011

Securities and Exchange Commission v. Christopher Sells and Timothy Murawski, Civil Case No. CV-11-4941-HRL (N.D. Cal., filed October 6, 2011)

SEC CHARGES SILICON VALLEY MEDICAL TECHNOLOGY EXECUTIVES IN FRAUDULENT SALES SCHEME

The Securities and Exchange Commission today filed fraud charges against two former sales executives with Mountain View, Calif. medical equipment company Hansen Medical, Inc., alleging they orchestrated fraudulent transactions to inflate the company’s reported revenues. In a separate proceeding, the SEC also filed settled charges against Hansen Medical for providing misleading financial information to public investors.

The SEC’s complaint, filed in federal district court in San Francisco, alleges that Christopher Sells, Hansen Medical’s former Vice President of Commercial Operations, and Timothy Murawski, a former Vice President of Sales who reported to Sells, participated in multiple improper sales transactions in 2008 and 2009. The SEC alleges the individuals engaged in the scheme as Hansen Medical underwent efforts to raise additional capital from investors.

According to the SEC’s complaint, on multiple occasions Sells of Dallas, Tex., and Murawski of Lake Zurich, Ill., schemed to have Hansen Medical personnel temporarily install the company’s robotic catheter system at a customer site before the customer was ready for it so that Hansen Medical could record the product sale. Hansen Medical personnel would then immediately dismantle the equipment and put it in storage until months later, when they would return to reinstall the equipment. The SEC further alleges that, in a sales transaction in the final days of December 2008, Sells and Murawski instructed Hansen Medical personnel to forge a customer signature on certain required documents to allow the company to record the revenue that quarter. According to the SEC, Sells and Murawski’s schemes were intended to circumvent revenue recognition rules and to fool Hansen Medical’s finance personnel and auditors into believing that the sales had been completed and revenue could be recorded.

The SEC’s complaint charges Sells and Murawski with violations of Sections 17(a)(1) and (3) of the Securities Act, and Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5 and 13b2-1 thereunder, aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. The SEC also charges Sells with violations of Rules 13b2-2 under the Exchange Act. The SEC seeks permanent injunctions and financial penalties against Sells and Murawski, and also seeks to bar Sells from serving as an officer or director of a public company.

In a separate administrative proceeding, Hansen Medical consented (without admitting or denying the SEC’s findings) to the entry of a Order that requires that Hansen Medical to cease and desist from committing or causing any violations and any future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act, and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. In considering whether to accept Hansen Medical's settlement offer, the Commission took into consideration Hansen Medical’s cooperation with the Commission’s investigation and its remedial efforts once the fraud came to light.

The case was investigated by Cameron Hoffman, Kristin Snyder, Ron Baer and Tracy Davis of the San Francisco Regional Office. The SEC’s litigation efforts will be led by Susan LaMarca and Sheila O’Callaghan.

 

http://www.sec.gov/litigation/litreleases/2011/lr22116.htm


Modified: 10/06/2011