Ex-Acclarent CEO, sales VP convicted in criminal case

A federal jury today convicted 2 former Acclarent executives, for the distribution of adulterated and misbranded medical devices.

Former CEO William Facteau and ex-sales vice president Patrick Fabian were convicted by a jury after a 6 week trial of 10 counts of “introducing adulterated and misbranded medical devices into interstate commerce.” Facteau is now chairman, president & CEO of EarLens, and Fabian was listed as the CCO of NxThera as of 2014.

The charges are in relation to the Relieva stratus Microflow Spacer, which were originally designed to maintain an opening in the sinus.

Facteau and Fabian launched the product intending it to be used as a steroid delivery device, even after the FDA had specifically refused Acclarent’s request to clear it as a drug delivery device without further regulatory submissions.

“The evidence at trial demonstrated that Facteau and Fabian sought to quickly develop and market products, including the Stratus as a drug delivery device, to create a projected revenue stream that would make Acclarent an attractive business for either an initial public offering or acquisition,” according to a report from the U.S. Attorney’s Office, District of Massachusetts.

The jury acquitted Facteau and Fabian of 14 felony counts of fraud, finding them guilty of 10 counts which were misdemeanors related to the same conduct.

A charge of violating the Food, Drug and Cosmetics Act has a maximum sentence of 1 year in prison for each count, 1 year of supervised release and a fine of $100,000 or twice the gross gain or loss, according to the court report.

Federal Prosecutors originally brought the conspiracy and fraud charges against Facteau and Fabian last April, accused of seeking to “quickly develop and market products to create a projected revenue stream that would make Acclarent an attractive target for either an initial public offering or acquisition,” according to the U.S. Justice Dept. Johnson & Johnson (NYSE:JNJ) subsidiary Ethicon paid $785 million for Acclarent back in 2010.

Prosecutors said Facteau pulled down about $30 million from the Ethicon-Accenture merger; Fabian’s take was about $4 million, they said.

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