Enforcement Action

 

Docket or Case Number:    3-18228

Court:    N/A

Initiation Date:    09/28/2017  Information

Prosecuting Agency:    US Securities and Exchange Commission

Name of Prosecuting Attorneys:    N/A

Assisting Agencies:    U.S. Department of Justice , Public Company Accounting Oversight Board (Nonprofit)

Type of Action:    SEC Administrative Proceeding

Origin of the Proceeding:    N/A

Whistleblower:    Unknown

Case Status:    Resolved


Summary  Information

Alere Inc. was a U.S. corporation that manufactured medical diagnostic testing equipment. The company's common stock was registered with the SEC and traded on the New York Stock Exchange under the symbol “ALR.”

Alere Colombia S.A. was a wholly-owned Colombian subsidiary of Alere formerly known as BioSystems, S.A. Alere Colombia sold Alere’s products in Colombian market. Biosystems was an independent distributor of Alere products until acquired by Alere.

Alere Medical Private Ltd. (“Alere India”) was a wholly-owned Indian subsidiary of Alere. Alere India sold Alere’s products in India.

According to the cease and desist order, between 2011 and 2016, Alere committed various accounting violations, including mischaracterizing in Alere’s books and records payments made to government officials by Alere Colombia and Alere India. In Colombia, Alere Colombia made payments of approximately $275,000 over the course of several years to a management level employee at an entity involved in Colombia's healthcare system. In 2011, the government assumed control of the entity, and the entity's employees became foreign officials under the FCPA. In all, Alere sold approximately $7.6 million worth of products to the entity, on which the company made profits of approximately $3.18 million. In India, Alere India paid its India distributor an increased commission intended for local government officials in order to increase the sales of its products there by 400%. Alere retained approximately $150,000 in profits from the increased contracts even after new management discovered the commissions and ended the practice.

On September 28, 2017, the SEC instituted an administrative proceeding against Alere alleging violations of the books and records and interal controls provisions of the FCPA as well as several other securities and accounting violations. Under the terms of the proceeding, the SEC ordered Alere to cease and desist violations of the FCPA and other securities provisions and further ordered the company to pay a civil penalty of $9.2 million, disgorgement of $3,328,689, and prejudgment interest of $495,196

Country(ies) involved:    Colombia, India

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    $13,023,885 / $3,330,000 = 391.11 %

Number of Related Enforcement Actions (Including This Enforcement Action):    1

Country(ies) involved:    Colombia, India

Total $ Bribery Payments:    N/A

Total $ Revenue Generated from Bribery:    N/A

Total $ Profit Earned or Expenses Avoided from Bribery:    N/A

Total $ Monetary Sanctions:    $13,023,885

Sanction to Bribe Ratio:    N/A

Sanction to Revenue Ratio:    N/A

Sanction to Profit Ratio:    N/A

Name:    Alere Inc.

Place of Incorporation:    United States

HQ Country(ies):    United States

Entity Type:    Public Company

FCPA Claims:    Books & Records, Primary, Issuer (15 U.S.C. § 78m (b)(2)(A)) ; Internal Controls, Primary, Issuer (15 U.S.C. § 78m(b)(2)(B))

Related Claims:    Securities Fraud (15 U.S.C. § 78j) ; Securities Fraud (17 C.F.R. § 240.10b-5) ; Securities Fraud (15 U.S.C. § 77q) ; Failure to File Accurate Reports (15 U.S.C. § 78m(a)) ; Failure to File Accurate Reports (17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-13)

Statutory Basis for FCPA Jurisdiction:    Issuer

Period of Bribery:   2007 - 2013

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $3,330,000

Country(ies) involved:    Colombia, India

Officials Potentially Influenced (Name; Title; Organization): 

  • Name N/A, Employees; Entidad Promotora de Salud
  • Name N/A, Officials; Local Indian government

Defendant-Related Entities Involved in the Misconduct:    Alere Colombia S.A. - Subsidiary ; Alere Medical Private Ltd. - Subsidiary

Third-Party Intermediary:   

  • Indian Distributor , Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in Colombia

Period of Bribery:   2007 – 2013

Total Bribery Payments:    $275,000

Total Revenue Generated from Bribery:    $7,600,000

Total Profit Earned or Expenses Avoided from Bribery:    $3,180,000

Country(ies) involved:    Colombia

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Employees; Entidad Promotora de Salud;

Defendant-Related Entities Involved in the Misconduct:    Alere Colombia S.A. - Subsidiary

Third Party Intermediary:    N/A

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

TRANSACTION OVERVIEW
Payments in India

Period of Bribery:   2012 – 2012

Total Bribery Payments:    N/A

Total Revenue Generated from Bribery:    N/A

Total Profit Earned or Expenses Avoided from Bribery:    $150,000

Country(ies) involved:    India

Officials Potentially Influenced (Name; Title; Organization):  

  • Name N/A, Officials; Local Indian government;

Defendant-Related Entities Involved in the Misconduct:    Alere Medical Private Ltd. - Subsidiary

Third Party Intermediary:    Indian Distributor - Agent/Consultant/Broker

Type of Bribe:   Money

Cash, Wire or Check:    No Available

Purpose of Bribe:    Obtain/retain business

Misconduct by Subsidiary?  Yes


Parent(s):   Alere Inc.

Subsidiary:  Alere Colombia S.A.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

Subsidiary:  Alere Medical Private Ltd.

  • Percentage of Ownership:    100.00 %
  • Direct or Indirect Ownership:    Unknown
  • Parent Had Knowledge of Sub’s Bribery?:    No
  • Subsidiary Expressly Alleged to Be Parent's Agent:    No
  • Parent Liable for Sub Misconduct?:    Yes

M&A Negotiated or Completed During Misconduct, Investigation, or Resolution?     No

N/A

Mitigating Factors Referenced by the Government (Company Defendants):

Defendant Self-Report Cooperation Voluntary Remedial Measures Misconduct Limited to Low Level Individuals Other factors
Alere Inc.          

Aggravating Factors Referenced by the Government (Company Defendants):

Defendant Insufficient Cooperation Insufficient Remedial Measures
Alere Inc.    

Total Monetary Sanctions for the Action:    $13,023,885

Case Status:    Resolved


Disposition:    Cease and Desist Order

Date of Disposition:    09/28/2017

Alere Inc.

—  Total Monetary Sanctions for Defendant:    $13,023,885

—  Compliance Obligation:    No

—  Reporting Obligation:    No Applicable

—  Admission of Guilt/Acceptance of Responsibility:    No

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