Former Impath CEO, president charged with fraud

Tue Mar 29, 2005 04:17 PM ET

NEW YORK, March 29 (Reuters) - The former chief executive and president of Impath Inc. were charged on Tuesday with taking part in an accounting fraud at the bankrupt medical diagnostic company, U.S. Attorney David Kelley said.

Anuradha Saad, Impath's former chairman and CEO, and Richard Adelson, the ex-president and chief operating officer, are accused of participating in a scheme to artificially inflate the company's profits and sales revenue in order to prop up the company's share price for their own financial gain, according to the unsealed indictments.

The government contends that when the investigation into the accounting irregularities was disclosed in July 2003, Impath's share price fell more than 88 percent, resulting in a loss of more than $260 million in shareholder value.

New York-based Impath filed for bankruptcy protection in September 2003.

Four other former Impath executives, including ex-Chief Financial Officer David Cammarata, have already pleaded guilty to conspiracy and fraud charges in connection with the accounting fraud. They are expected to cooperate in the government case against Saad and Adelson.

Kelley said the investigation is ongoing.

The six former Impath executives are also facing civil charges, the U.S. Securities and Exchange Commission said.

"The SEC's complaint alleges that the defendants engaged in an accounting fraud scheme that was simple yet brazen," said Mark Schonfeld, director of the SEC's New York office.

"When the company's performance did not meet Wall Street expectations the defendants simply plugged into the financial statements the revenue and expense figures they needed to get the numbers," Schonfeld said.

More here.