Defendant Name: Orthofix International N.V.

Defendant Type: Public Company
SIC Code: 3840
CUSIP: N6748L10

Document Reference: comp22412

Document Details

Legal Case Name SEC v. Orthofix International N.V.
Document Name Complaint
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 filed a complaint against Orthofix International N.V. The complaint stated that: "This matter involves violations of the books and records and internal controls provisions of the Foreign Corrupt Practices Act ('FCPA') by Defendant Orthofix International N.V. ('Orthofix'), an orthopedic medical device company. From 2003 to 2010, Orthofix's wholly-owned Mexican subsidiary, Promeca S.A. de C.V. ('Promeca'), repeatedly paid bribes totaling approximately 317,000 to Mexican officials in order to obtain and retain sales contracts from Instituto Mexicano del Seguro Social ('IMSS'), the Mexican government-owned healthcare and social services institution. Promeca employees referred to these payments as 'chocolates.' These improper payments, falsely recorded on the company's books as cash advances to Promeca executives or training and promotions expenses, generated approximately $8.7 million in gross revenues for Orthofix and resulted in illicit net profits of about $4.9 million."

Related Documents:

LR-22412 10-Jul-2012 Litigation Release
SEC Charges Orthofix International With FCPA Violations
On July 10, 2012, the SEC announced that Orthofix International agreed to pay $5.2 million as part of a settlement of the SEC's enforcement action against Orthofix International.
2012-133 10-Jul-2012 Press Release--Civil Action
SEC Charges Orthofix International With FCPA Violations
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.
court_doc8_12-cv-00419 04-Sep-2012 Court Docket Document
Final Judgment as to Defendant Orthofix International N.V.
On August 21, 2012, Federal District Judge Ron Clark entered final judgment against Orthofix International N.V. pursuant to the consent of Orthofix International N.V.