Processing your request


please wait...

Enforcement Action Dataset

 

Initiation Date:    07/10/2012  Information

Prosecuting Agency:    U.S. Securities and Exchange Commission

Type of Action:    SEC Federal Court Proceeding

Docket or Case Number:    12-cv-419

Court:    E.D. Texas

Name of Prosecuting Attorneys:   

  • Toby M. Galloway, SEC Fort Worth Regional Office
  • John W. Berry, SEC Los Angeles Regional Office

US Assisting Agencies:   

  • U.S. Department of Justice
  • Federal Bureau of Investigation

Foreign Enforcement Action/Investigation:    Unknown

Foreign Assistance:    Unknown

Origin of the Proceeding:    Voluntary disclosure

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Orthofix International, N.V. ("Orthofix N.V. ") was a multinational corporation principally involved in the design, development, manufacture, marketing and distribution of medical devices, and was incorporated in Curacao. Orthofix N.V. sold and distributed its products around the world from facilities in the United States, the United Kingdom, Italy, Mexico, and elsewhere. Orthofix N.V. employed over 1,500 people and maintained its corporate administrative offices in Lewisville, Texas. Orthofix N.V. had a class of securities registered with the SEC and was publicly traded on the NASDAQ.

Promeca S.A. de C.V. ("Promeca") was incorporated in Mexico and headquartered in Mexico City. Promeca was an indirectly wholly owned subsidiary of Orthofix N.V. that distributed Orthofix N.V.'s medical nails and fixators in Mexico. Promeca employed more than 50 employees, and its financial results were consolidated with Orthofix N.V.'s corporate financial statements, books, and records.

From around 2003 through around March 2010, with the knowledge of a senior manager at Orthofix Inc. ("Orthofix Executive A"), Promeca and its employees paid approximately $317,000 to Mexican officials in return for agreements with Instituto Mexicano del Seguro Social ("IMSS"), a social-service agency of the Mexican government that provided public services to Mexican workers and their families, and its hospitals to purchase millions of dollars in Orthofix N.V. products. Promeca personnel colloquially referred to the illicit payments as "chocolates," a term commonly understood within Promeca and by Orthofix Executive A to describe a supplier's improper payments to purchasers of medical supplies and devices in exchange for an agreement to buy the supplier's goods. In all, the improper payments generated approximately $8.7 million in gross revenues and resulted in illicit net profits to Orthofix of about $4.9 million.

On July 10, 2012, the SEC filed a two count Complaint in the Eastern District of Texas against Orthofix N.V. alleging violations of the books & records and internal controls provisions of the FCPA. On the same date, the company entered into a Consent Agreement with the SEC. Under the terms of the agreement, Orthofix N.V. acknowledged that it had accepted responsibility for the conduct in a separate deferred prosecution agreement with the DOJ and agreed to be permanently enjoined from future violations of the FCPA, to pay disgorgement of $4,983,644 plus prejudgment interest of $242,057, and to issue periodic reports to the SEC for a term of two years on the implementation of its enhanced anti-corruption compliance policies and procedures.

Protected Content


Please Log In or Sign Up for a free account to access restricted features of the Clearinghouse website, including the Advanced Search form and the full case pages.

When you sign up, you will have the option to save your search queries performed on the Advanced Search form.