Tuesday, February 21, 2017

Accountant Cites $32.4 Million NECC Revenue

By Walter F. Roche Jr.

A forensic auditor testified today that the New England Compounding Center's revenues soared in its final ten months of operation hitting $32.4 million and pushing the company's total sales since its inception in 1998 to $153 million.
Roger Edwards, a forensic accountant, was called as a prosecution witness in the trial of NECC's one time president and part owner Barry J. Cadden. Cadden has been charged with racketeering and 25 counts of second degree murder following a grand jury probe of the deadly 2012 fungal meningitis outbreak.
In other testimony Tuesday, Cadden's attorney Michelle Peirce continued to sharply question a key prosecution witness, NECC's quality control manager, Annette Robinson.
Robinson acknowledged in a later exchange with prosecutors that she testified before the grand jury investigating NECC under a grant of immunity and she had legal counsel at the time. Robinson was not charged in the 2014 indictment.
Edwards testified that he had examined the books of NECC and at first the now defunct company had the appearance of a small family business. That changed in 2007 when there was a dramatic increase  in revenues.
He said there was another "significant" jump in 2012 when revenues hit  a record $32.4 million, even though the company was only in business for a little over nine months. NECC shutdown in early October after the outbreak became public.
Edwards also will be testifying later this week on a report he compiled showing Barry Cadden and his wife, Lisa, collected $18 million in profits from NECC from the 1998 startup till the 2012 closure. The accountant's report lists payments of $8.5 million to Lisa Cadden and $9.5 million to Barry Cadden between 1998 and October of 2012.
The cross examination of Robinson took most of the Tuesday session as Peirce repeatedly questioned apparent differences between the witness's statements in court last week and testimony she gave before the grand jury and in interviews with federal investigators.
Peirce focused on Robinson's statement about the fact that bioindicators were not being used when drugs were being sterilized in an autoclave. Robinson testified last week that Cadden told her in 2012 that they should have been using bioindcators all along.
Peirce cited Robinson's grand jury testimony in which she said Cadden "may have" made that statement.
Peirce also asked Robinson about how many times she had been questioned by federal officials and whether she was discussing her upcoming testimony with prosecutors during a break in the day's court session.
U.S. District Judge Richard G. Stearns cut off that line of questioning.
"I'm sure nothing untoward happened," he said.
Robinson testified earlier that when she was about to be questioned by officials from the U.S. Food and Drug Administration in 2012, Gregory Conigliaro, an NECC part owner, told her to just tell the truth.
Asked if Cadden hadn't said the same thing, Robinson agreed that may have happened.
Peirce also challenged Robinson's statement that she notified Cadden whenever test results from an independent testing firm showed any NECC drugs were out of specifications or when she discovered mold in the clean rooms.
"I would go in and say, 'Barry there is a lot of mold,'"Robinson responded. "I went to him when I thought there was a problem."
Several of Peirce's questions related to Robinson's admission that she thought she might have caused the outbreak because she mishandled a glove box while collecting environmental monitoring samples.
"Did you clean it," Peirce asked.
"No," Robinson responded.
She also acknowledged she did not report the incident at the time it occurred.

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