Jonathan Wilcox; Jason Boucher; Karen Smith
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26250 / February 19, 2025
Securities and Exchange Commission v. American Renal Holdings Associates, Inc., et al., Civil Action No. 1:22-cv-10651 (D. Mass. filed Dec. 6, 2021)
SEC Obtains Final Judgments Against Three Defendants in Fraudulent Revenue Manipulation Scheme
In January 2025, the U.S. District Court for the District of Massachusetts entered final judgments against the remaining defendants in a case involving a fraudulent scheme to manipulate the revenue of American Renal Associates Holdings, Inc. (ARA), a provider of dialysis services through clinics across the country. The remaining defendants were two of ARA’s former Chief Financial Officers, Jonathan Wilcox and Jason Boucher, and ARA’s former Controller and Vice President of Finance, Karen Smith. The U.S. District Court for the Southern District of New York previously entered judgment against defendant ARA in case number 1:21-cv-10366.
The SEC’s action alleged that, from 2017 through at least November 2018, the defendants improperly manipulated certain revenue adjustments to enhance ARA’s financial performance. These revenue adjustments should have been used to reflect actual cash received from insurance companies for patient services and to update initial estimates of revenue that ARA expected to receive. As alleged in the complaint, ARA and the defendants improperly recorded these adjustments to hit targets on key financial metrics. The complaint further alleges that ARA used a revenue “cookie jar” that contained adjustments that should have been recorded, but were not recorded until the adjustments were needed to meet targets for the key financial metrics. The complaint also alleges that defendants Boucher and Smith created false documents to mislead ARA’s auditor and prevent discovery of their improper accounting practices. In September 2019, ARA issued restated financial statements which, among other things, reflected that it had overstated its net income by more than 30% for 2017 and by more than 200% for the first three quarters of 2018.
The final judgment against Wilcox, entered on January 14, 2025, permanently enjoins him from violating the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933 and the requirements of Section 13(b)(5) of the Securities Exchange Act of 1934 and Rules 13b2-1 and 13a-14 thereunder. The judgment orders Wilcox to reimburse ARA in the amount of $45,000 under Section 304(a) of the Sarbanes-Oxley Act of 2002, and to pay a civil penalty of $45,000. The final judgment against Boucher, entered on January 28, 2025, permanently enjoins him from violating the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the requirements of Exchange Act Section 13(b)(5) and Rules 13b2-1, 13b2-2(a) and 13a-14 thereunder. The judgment prohibits Boucher from acting as an officer or director of a public company for two years and orders Boucher to reimburse ARA in the amount of $18,926 under Section 304(a) of the Sarbanes-Oxley Act of 2002, and to pay disgorgement of $20,102, prejudgment interest of $8,924, and a civil penalty of $60,000. The final judgment against Smith, entered on January 17, 2025, permanently enjoins her from violating the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933 and the requirements of Section 13(b)(5) of the Securities Exchange Act of 1934 and Rules 13b2-1 and 13b2-2(a) thereunder. The judgment prohibits Smith from acting as an officer or director of a public company for one year and orders Smith to pay disgorgement of $43,348.59, prejudgment interest of $17,106.82, and a civil penalty of $35,000.
The SEC’s case was handled by Jonathan Austin, John Bowers, Peter Lallas, Brian Palechek, Andrew Skolnik, Christopher Bruckmann, Pei Chung, and Stacy Bogert of the Home Office and Kathleen Shields, David D’Addio, and Alyssa DiPaolo of the Boston Regional Office.