Two former executives of Bristol-Myers Squibb Co., previously indicted on criminal conspiracy and securities fraud charges, were sued Monday by federal regulators who accused them of civil fraud in orchestrating a $1.5 billion scheme to deceive investors about the company’s performance.
The Securities and Exchange Commission announced the lawsuit against Frederick Schiff, Bristol-Myers’ former chief financial officer, and Richard Lane, former executive vice president and president of the pharmaceutical company’s worldwide medicines group.
The SEC is seeking unspecified civil penalties against the two former executives. The suit accuses them of instructing staff in 2000-2001 to create incentive packages for the company’s biggest wholesalers to inflate sales and profit figures, while misleading Wall Street analysts and investors.
Their attorneys didn’t immediately return telephone calls seeking comment.
Schiff and Lane pleaded not guilty in June to the criminal charges, for which they could face up to 10 years in prison and $1 million in fines if convicted. They remain free on bond.
Also in June, Bristol-Myers agreed to pay $300 million in a deal with the Justice Department to avoid prosecution on a conspiracy charge stemming from its accounting scandal. The company has doled out about $800 million to settle lawsuits and investigations tied to the incentives it paid its wholesalers to stockpile inventory, inflating sales and earnings. In March 2003, New York-based Bristol-Myers restated $900 million in profits and $2.5 billion in revenue reported from 1999 through the first half of 2002.
Bristol-Myers also agreed, in August 2004, to pay $150 million to settle the SEC’s related civil charges of manipulating its inventory of drugs to inflate earnings and meet Wall Street targets. It was one of the largest SEC penalties in recent years for alleged accounting violations against a company that continues to operate.