U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19783 / August 1, 2006
SEC v. Anuradha D. Saad, et al., 05 CV 3308 (SDNY) (JSR)
Top Two Former Executives Of Impath Inc. Agree To Settle Financial Fraud Charges in Pending SEC Enforcement Case
Ex-CEO And Ex-President Consent To Permanent Injunctions And Officer-And-Director Bars; Ex-CEO Also Agrees To Pay Over $2 Million In Disgorgement And Civil Penalties
The Commission announced today that defendants Anuradha D. Saad ("Saad"), the former Chief Executive Officer and Chairman of the Board of IMPATH, Inc. ("Impath"), and Richard P. Adelson ("Adelson"), Impath's former President and Chief Operating Officer, have consented to the entry of final judgments against them in the Commission's pending federal court action. The judgments, which were issued by the Honorable Jed S. Rakoff of the Southern District of New York and entered on July 31, 2006, prohibit Saad and Adelson from acting as officers or directors of a public company and impose permanent injunctive relief for violations of antifraud, proxy solicitation, corporate reporting, books and records and internal control provisions of the federal securities laws. Specifically, Saad and Adelson are permanently enjoined from violating, or engaging in conduct that would make them liable for violations of, Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2), 13(b)(5) and 14(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, 14a-3 and 14a-9. In addition, Saad agreed to pay a total of $2,055,047, consisting of $1,905,047 in disgorgement plus prejudgment interest and a $150,000 civil penalty. The Commission's requests for disgorgement and civil penalties against Adelson were withdrawn in view of Adelson's having been sentenced to serve 42 months in prison and to pay $1.2 million in civil forfeiture and $50 million in restitution as a result of his conviction earlier this year in the parallel criminal case. Both Saad and Adelson consented to the entry of the final judgments without admitting or denying the allegations in the Commission's complaint, which was filed on March 29, 2005.
The complaint named Saad, Adelson and five other former Impath executives as defendants: David Cammarata ("Cammarata"), the Chief Financial Officer, Peter J. Torres ("Torres"), the Vice President for Corporate Finance, Robert McKie ("McKie"), a divisional Vice President, Karin Gardner ("Gardner"), the Controller, and Kenneth Jugan ("Jugan"), the National Billing Director. The complaint alleges that the defendants engaged in fraudulent accounting practices to make it appear that Impath, formerly a public company that provided laboratory services used in the treatment of cancer, had made multimillion dollar profits when it had actually suffered large losses. Impath filed for bankruptcy in September 2003 and is being liquidated. The complaint further alleges that Saad, Adelson and Cammarata engaged in multiple forms of undisclosed self-dealing, including the use of corporate funds to pay for stock option exercises without obtaining board approval or making the required proxy statement disclosures. The ill-gotten gains that Saad is required to disgorge under the terms of the settlement include $352,000 in stock option exercise costs that she paid with corporate funds, as well as $990,537 in proceeds from her sales of Impath stock and a $220,000 severance payment.
In the parallel criminal case, Adelson was tried before a jury, and on February 16, 2006, he was convicted on multiple counts of conspiracy, securities fraud, and filing false reports with the Commission. On May 30, 2006, Adelson was sentenced to 42 months in prison and was also ordered to forfeit $1.2 million and to pay, on a joint and several basis, restitution of $50 million. Saad had previously pled guilty to two felony counts of solicitation of proxies with false proxy statements, and one count of failure to implement an adequate system of internal accounting controls. Saad was sentenced to three months in prison, followed by two years of supervised release, and ordered to pay a $6,900 fine. Cammarata, Torres, Gardner, and Jugan previously pled guilty to conspiracy to commit securities fraud and related counts, and in June 2006, they were each sentenced to pay, jointly and severally, restitution of $50 million. Cammarata was also sentenced to one month in prison.
Cammarata, Torres, Gardner, and Jugan previously consented to the entry of judgments in the civil case that permanently enjoin them from committing the federal securities law violations alleged in the Commission's complaint and, in the case of Cammarata and Torres, bar them from acting as officers or directors of a public company. In addition, Cammarata consented to the entry of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice suspending him from appearing or practicing before the Commission as an accountant. On July 28, 2006, the Commission withdrew its requests for disgorgement and civil penalties against Cammarata, Torres, Gardner, and Jugan in view of the sentences imposed on them in the criminal case.
McKie had consented to the entry of a final judgment imposing permanent injunctive relief, disgorgement plus prejudgment interest and a civil penalty simultaneous with the filing of the Commission's complaint. Accordingly, the civil case is now concluded.
The Commission acknowledges the assistance and cooperation of the United States Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter.