Ex-Valeant, Philidor executives are jailed for fraud

NEW YORK (Reuters) – A former executive at Valeant Pharmaceuticals International Inc. and the former head of a start-up mail-order pharmacy were sentenced to one year in prison on Tuesday after being convicted of a secret bribery criminal case.

FILE PHOTO – Ex-Senior Valeant Director Gary Tanner walks on the street after leaving the Manhattan Federal Court in New York, USA. February 23, 2017. REUTERS / Eduardo Munoz

Gary Tanner, 41, the former Valeant manager, and Andrew Davenport, 50, the former chief executive of Philidor Rx Services LLC, were also asked to lose $ 9.7 million, which is the alleged bribes.

The verdicts were imposed by US District Judge Loretta Preska in Manhattan.

Both defendants were sentenced to four charges in May, including honest services, fraud and money laundering conspiracy.

The prosecutors had recommended imprisonment between 2-1 / 2 and 10 years for Tanner and 2-1 / 2 and 8 years for Davenport. The defendants said that no jail time was justified.

Tanner and Davenport lawyers did not immediately respond to requests for comments.

The case was the first prosecution to emerge from several investigations into Valeant's business practices, including his ties to the now-defunct Philidor.

These connections began in October 2015, when investors learned that Valeant had acquired an option to purchase Philidor in 2014 and was suspected of using it to promote sales.

The revelations contributed to a sharp decline in the Valeant share price, boosted by the high debt of the Laval, Quebec, and the probes.

Management was overhauled, and Valeant was renamed Bausch Health Cos in July, named after the name of the Bausch & Lomb Eye Care Unit.

Tanner had managed the relationship between Valeant and Philidor, as well as Valeant's "Alternative Fulfillment" program, through which the pharmaceutical company attempted to increase prescriptions for its own drugs instead of generic substitutes.

The prosecutors accused Tanner of leaving the Valeant business to Philantor, while concealing Davenport's $ 9.7 million kickback from Davenport, which is worth $ 50 million, when Valeant bought the option to buy his company.

"I deeply regret giving money to Gary Tanner," Davenport told Preska.

Prosecutors said that Tanner often used an email account called "Brian Wilson" to communicate with Davenport and sabotage potential deals with competing pharmacies to keep the system a secret.

"Tanner was commissioned to manage Valeant's relationship with Davenport's company," US Attorney Geoffrey Berman said in a statement. "Instead, they devised a plan to plunder Valeant and share the proceeds."

The case is U.S.V. Tanner et al., US District Court, Southern District of New York, No. 17-cr-00061.

Reporting by Brendan Pierson and Jonathan Stempel in New York; Editing by Bill Berkrot

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