Two former executives from Valeant Pharmaceuticals and mail-order pharmacy Philidor Rx Services were sentenced to one year in prison and ordered to forfeit $9.7 million for defrauding the drugmaker through a secret kickback scheme, according to CNBC.
Gary Tanner, the former executive from Valeant, and Andrew Davenport, the former CEO of Philidor, were convicted on four charges, including honest services wire fraud and conspiracy to commit money laundering in May.
Prosecutors accused Mr. Tanner of steering Valeant business to Philidor and concealing a $9.7-million kickback from Mr. Davenport. The $9.7 million was part of a $50-million payment Mr. Davenport received when Valent sought to buy the mail-order pharmacy. To conceal the scheme, Mr. Tanner reportedly used an email account with the alias "Brian Wilson" to communicate with Mr. Davenport.
Prosecutors recommended prison terms ranging from 2.5 to 10 years for Mr. Tanner and 2.5 to eight years for Mr. Davenport.
"[Mr.] Tanner was entrusted to manage Valeant's relationship with Davenport's company," said U.S. Attorney Geoffrey Berman, according to CNBC. "Instead, they devised a scheme to pillage Valeant and share the proceeds."
The case marks the first criminal prosecution arising from federal probes into Valeant's operations. In an effort to save its reputation, the embattled drugmaker overhauled its management team and changed its name to Bausch Health in July.