Defendant Name:
Orthofix International N.V.
Defendant Type:
Public Company
Document Reference:
2012-133
Document Details
Legal Case Name
SEC v. Orthofix International N.V.
Document Name
SEC Charges Orthofix International With FCPA Violations
Document Date
10-Jul-2012
Document Format
Civil Proceeding
Case Number
12-cv-00419
Federal District Court
Texas, Eastern District of Texas
Allegation Type
Foreign Corrupt Practices Act
Document Summary
On July 10, 2012, the SEC charged Texas-based medical device company Orthofix International N.V. ("Orthofix") with violating the Foreign Corrupt Practices Act ("FCPA") when its subsidiary paid routine bribes referred to as "chocolates" to Mexican officials in order to obtain lucrative sales contracts with government hospitals. The bribery scheme, which began in 2003, continued until 2010 and yielded nearly $5 million in illegal profits for Orthofix's Mexican subsidiary Promeca S.A. de C.V. ("Promeca"). According to the SEC's complaint filed in U.S. District Court for the Eastern District of Texas, Promeca initially recorded the bribes as cash advances and falsified its invoices to support the expenditures. As the bribes became larger, Promeca falsely recorded them as promotional and training costs. Because of the illicit payments, Promeca's training and promotional expenses were significantly over budget. Orthofix did launch an inquiry into these expenses but did very little to investigate or diminish the excessive spending. Later, upon discovery of the bribe payments through a Promeca executive, Orthofix immediately self-reported the matter to the SEC and implemented significant remedial measures. The company also terminated the Promeca executives who orchestrated the bribery scheme. As part of the SEC's proposed settlement, which remains subject to court approval, Orthofix consented to a final judgment ordering it to pay $4,983,644 in disgorgement and more than $242,000 in prejudgment interest. The final judgment would also permanently enjoin the company from violating the books and records and internal controls provisions of the FCPA. In addition, Orthofix agreed to certain undertakings, including monitoring its FCPA compliance program and reporting back to the SEC for a two-year period. In a parallel action with the Department of Justice ("DOJ"), Orthofix agreed to pay a $2.22 million penalty to settle the DOJ's charges.
Disgorgement & Penalty Information
Resolutions
Enjoinment
Other Compliance Related Undertaking
Various undertakings
Self Reporting to SEC
Monetary Penalties:
Disgorgement
Individual:
$4,983,644.00
Shared:
Pre-Judgment Interest
Individual:
$242,000.00
Shared: