Biotech company MiMedx Group last week announced the appointment of William Phelan as senior vice president and chief accounting officer.
Phelan began the job May 1. His appointment comes roughly five months after MiMedx settled an alleged case of accounting fraud with the Securities and Exchange Commission for $1.5 million.
According to the SEC, from 2013 to 2017, MiMedx prematurely recognized revenue from sales to its distributors and exaggerated its revenue growth. Former CEO Parker Petit and former COO William Taylor allegedly entered into undisclosed side arrangements with five distributors that allowed distributors to return product to MiMedx or conditioned distributors’ payment obligations on sales to end users.
Petit, Taylor, and former CFO Michael Senken allegedly covered up this scheme for years, despite concerns raised by a former controller at the company. The SEC also alleged Petit, Taylor, and Senken misled MiMedx’s outside auditors, members of its audit committee, and outside lawyers who inquired about the transactions.
The SEC’s complaint charged all defendants with violating the anti-fraud, reporting, books and records, and internal control provisions of the federal securities laws. The SEC also charged Petit, Taylor, and Senken with lying to MiMedx’s outside auditors and sought officer-and-director bars against the three executives.
According to new CFO Peter Carlson, Phelan, who has worked as a consultant with MiMedx for nearly two years, has provided the company “significance expertise” throughout the restatement process in the wake of the SEC scandal. “He has been critical to moving MiMedx towards becoming current in our financial reporting and strengthening the company’s internal controls,” Carlson said.
Prior to joining MiMedx, Phelan was a managing director at accounting advisor firm CFGI. Before joining CFGI, he served as vice president and chief accounting officer at a Florida-based pharmaceutical company.
MiMedx appointed a new chief compliance officer, Mark Graves, in July 2018 and announced the appointment of William Hulse as its new general counsel and secretary on the same day as its settlement with the SEC. The Department of Justice still has charges open against Petit and Taylor for their alleged roles in the accounting fraud.