breaking news

Students call for stricter gun laws at Southwest Austin middle school during walkout

Former ArthroCare CEO sentenced to 20 years in federal prison


The one-time head of Austin-based ArthroCare Corp. has been sentenced to 20 years in federal prison for his role in a scheme that federal prosecutors say caused shareholder losses of more than $750 million.

Former CEO Michael Baker, 58, was convicted of one count of conspiracy to commit wire fraud and securities fraud, seven counts of wire fraud, two counts of securities fraud and two counts of making false statements, the U.S. Department of Justice said.

After completing his prison term, Baker will serve five years of parole. He must also pay a $1 million fine and forfeit $13.7 million, according to a news release.

“Evidence at trial showed that, beginning in 2005 and continuing until 2009, Baker, along with his co-conspirators, masterminded and executed a scheme to artificially inflate sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors,” the Department of Justice said.

“Baker, along with his co-conspirators, determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. Baker and others then caused ArthroCare to ‘park’ millions of dollars’ worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter. ArthroCare reported these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts.”

This was a retrial for Baker. His initial conviction was overturned by the U.S. Court of Appeals for the Fifth Circuit. The prison sentence then was the same: 20 years.

Baker’s co-conspirators, according to federal indictments, were chief financial officer Michael Gluk and David Applegate and John Raffle, both senior vice presidents of ArthroCare.

Applegate and Raffle have both pleaded guilty to multiple felonies. Raffle got an 80-month sentence, while Applegate got five years.

Gluk will be sentenced Jan. 5, according to the Department of Justice.



Reader Comments ...


Next Up in Business

Gibson pushes back against bankruptcy talk, hires new CFO
Gibson pushes back against bankruptcy talk, hires new CFO

Gibson is pushing back against reports of an impending bankruptcy and has hired a new chief financial officer, who starts with the company Monday. Officials with Gibson Brands, Inc., maker of the famed Les Paul and ES-335 electric guitars, released a statement saying the company has met all “current obligations to the bondholders, is in the process...
Put that pen down: Why baby boomers should not co-sign college loans 
Put that pen down: Why baby boomers should not co-sign college loans 

We all know that young people should show respect for their elders. In return, those elders should extend all their resources to the up-and-coming generation. Right? Not so fast, says the Motley Fool. When it comes to co-signing for college loans, parents and grandparents in the Baby Boom generation (born 1946 to 1964) should just say no...
Asian grocer 99 Ranch Market sets Austin opening date
Asian grocer 99 Ranch Market sets Austin opening date

Nearly two years after it was first announced, 99 Ranch Market is almost ready to make its debut. The Asian grocer, which has more than 40 locations nationwide, will open its doors March 3 in The Crescent, a shopping center at 6929 Airport Blvd. in North Austin. The store, the first 99 Ranch Market in Austin, has a companion liquor store located in...
Meet Janice Bryant Howroyd, the first African-American woman to run a $1 billion business
Meet Janice Bryant Howroyd, the first African-American woman to run a $1 billion business

Janice Bryant Howroyd, 65, is founder and chief executive of Act 1 Group, an employment agency that also provides consulting and business services, including background checks and screening. She’s the first African-American woman to operate a company that generates more than $1 billion in annual revenue, according to Black Enterprise Magazine...
$12 million renovation project set for Great Hills Country Club
$12 million renovation project set for Great Hills Country Club

Construction is due to start this month on an all-new Great Hills Country Club in Northwest Austin, which will replace the club that went up in the mid-1970s. The new, $12 million complex will consist of a two-story, 27,000 square foot clubhouse; a one-story community recreation building with 4,500 square feet; and a pool pavilion, plus new parking...
More Stories