By Matthew Russell Lee, Patreon
BBC - Guardian UK - Honduras - ESPN
SDNY COURTHOUSE, Oct 12– Parker "Pete" Petit and William Taylor were charged with conspiracy and securities fraud with respect to MiMedx.
On October 5, 2020 U.S. District Court for the Southern District of New York Judge Jed S. Rakoff held a pre-trial proceeding. Inner City Press covered it, below - and the entire trial, to the guilty verdicts.
Docketed on Pete Petit on October 5 was this: "Minute Entry for proceedings held before Judge Jed S. Rakoff: Telephone Conference without transcription or recording as to Parker H. Petit held on 10/4/2021. AUSA Daniel Tracer for the Government and Alexandra Shapiro and Daniel O'Neil of Shapiro Arato Bach for the Defendant were present. The Court denied the defendant's application for leave to file a motion for sentence modification. However, the Court grants leave to file a motion and proposed order regarding the provision of medical care during the defendant's incarceration."
On October 12, Judge Rakoff held a proceeding and Inner City Press covered it. Judge Rakoff denied the motion to extend the surrender date, and said he would withdraw a previous order that touched on treatment. He said he had been considering exploring sanctions against doctors but wouldn't move on it, for now. Then he ordered: "as to Parker H. Petit. Defendant is an 82-year old man under treatment for a variety of health conditions. He is scheduled to surrender to the custody of the Bureau of Prisons on October 21, 2021 -- a date which shall not be further adjourned -- to serve a one-year sentence imposed pursuant to a jury's conviction on November 19, 2020. For the reasons stated on the record in the hearing conducted today on the defendant's motion for an order directing certain medical treatment during his period of incarceration, see Transcript 10/12/21, the Court, in addition to denying the defendant's motion, finds it necessary to amend its September 7, 2021 Order, which inter alia recommended certain medical treatments requested by the defendant. ECF 209. The defense now concedes the inaccuracy of its earlier representation that the veterinary anti-parasitic drug Panacur is "approved for human use," a representation upon which the Court relied. See id. at 4. Accordingly, the Court withdraws its recommendation that the Bureau of Prisons permit Petit to bring a supply of Panacur with him to prison and that he be permitted to access a sustained supply of that medication while incarcerated. See id. at 1-2. The other aspects of the September 7, 2021 Order remain unchanged. Decisions regarding Petit's cancer treatment protocol following his surrender to Bureau of Prisons custody are committed to the discretion of the physicians employed at Federal Medical Center Butner, where Petit has been designated.."
In May 2021 we turned to a related civil case, Sparrow Fund Management LP v. MiMedx Group, Inc. et al., 18-cv-4921 (Gardephe / Parker). At issue are not only New York's Anti-SLAPP suit laws, but also MiMedx' back-channeling of and with government agencies to go after critics.
For example, there is MMIG-02528961 concening "MiMedx's investigatory strategy to uncover the identities of the anonymous bloggers by backchanneling with the FBI."
On August 18, Magistrate Judge Parker held another proceeding. Inner City Press again covered it. A company in Georgia said it was no unwilling to comply with a subpoena, but that the requesting lawyer should "lower the temperature." We'll see. We'll have more on this.
Back on November 19, on the fourth day of jury deliberations the MiMedx jury came back with guilty verdicts, and not guilty verdicts, for both Petit and Taylor.
On February 23, seeking a sentence of no jail time, Petit appeared virtually before Judge Rakoff (and got one year).
On February 24 co-defendant Taylor appeared in person, took off one of two masks to speak -- and got the same sentence, one year. Inner City Press live tweeted it, here and below.
Now on May 23, docketed May 24, Judge Rakoff has ruled against MiMedx's request for restitution as a victim: "the Court concludes that it has no legal authority to impose restitution on Petit at this stage. But even if the Court were authorized to amend the judgment in the manner suggested by MiMedx, the Court would not impose restitution on Petit because, as discussed below, MiMedx is not a “victim” under the restitution statutes and is therefore not entitled to recover restitution from either Petit or Taylor... the direct and proximate effect of their conduct was to inflate [MiMedx’s] share price. That benefit was short-lived, of course, but only because [their] fraud and the problematic accounting [was eventually discovered]." Judge Rakoff cites approvingly fellow SDNY Judge J. Paul Oetken's decision in United States v. Block, No. 16-cr-595 (JPO), 2018 WL 722854 (S.D.N.Y. Feb. 6, 2018).
Judge Rakoff: The guideline range here is 262 to 327 months in prison. Bizarre. Barbaric. Absurd. But just one more reflection of how misguided the guidelines are in this area.
Judge Rakoff: Even if we used gain instead of loss and didn't add enhancements we'd still have a guidelines of 27 to 33 months. I'm considering a sentence below even that range. The bottom line is, my sentence will be my sentence and it will be mine regardless Inner City Press @innercitypress · 49m Judge Rakoff: On loss amount, we've had the battle of the experts. The drop in MiMedx' stock is due to the accounting fraud. There were at least 739 shareholders... given my view of the loss situation, there were obviously 10 or more victims.
Judge Rakoff: This required sophisticated means, so that adjustment is supported. These are a piling on of numbers derived not through science - they make astrology look good by comparison. The Guidelines seem to be interested in everything but human beings.
Taylor's lawyer: We listened to your sentencing of Mr. Petit yesterday and Mr. Taylor was very impressed. It was important to Mr. Taylor that he be here today, and be sentenced in person.
Judge Rakoff: But for Mr Petit's health, I would have sentenced him to 4 years, and would probably have given Mr. Taylor 2 years. So what do I do? Mr Taylor has positive qualities, which you've ably argued. But I'm thinking of less than 2 [years] but more than 1
AUSA: On First Medical, it was Mr. Taylor who sent these two emails. With CCM, he directed his subordinates to conceal swaps from the company's auditors. So the culpability gap here is not so great.
Taylor's lawyer: Mr. Taylor is not near to Mr. Petit in terms of personal resources. He will likely end up bankrupt. MiMedx has sued him for legal fees they incurred. There are securities law suits against him.
Taylor's lawyer: Can he take one of his two masks off?
Judge Rakoff: Yes, I think he can take one off. Taylor himself: I wrote a detailed letter, so I'll keep this brief. This case has been a catalyst for me to look inward.
Taylor: One of my business matras is, Do the right thing. Clearly the jury did not think I did. I will [sobs] do everything in my power to be a better person. I've reviewed my actions and deeds over the past 30 years to see what I can learn.
Taylor: Once on the other side of sentencing, I hope to help others with my experience. I want to apologize to my friends and family, to my former co-workers at MiMedx, saving tens of thousands of lives and limbs. Some may have been denied the products.
Judge Rakoff: There are downsides to being young, as well as to being old. It's very interesting to read the letters in this case. There were people who tried to whiste-blow and got harmed, even after they left the company. Mr. Petit was more involved in that.
Judge Rakoff: Mr. Taylor's friends and family letter speak to his good deeds. And these should be considered, especially on the day of sentencing. Should Mr Petit's light sentence give Mr Taylor a windfall? The defense says, How is the public going to understand?
Judge Rakoff: Having weighed all this, I am guided by a beautiful thing about 3553(a) - impose the sentencing that is the LEAST that will satisfy the functions of 3553(a). So, not without some pause, I am going to give Mr. Taylor one year in prison.
Judge Rakoff: I impose a fine of $250,000, with one year to pay it. In terms of surrender date, I'll put it off until the prisons should be back to some semblance of normalcy. So, Sept 21.
[The request was for Montgomery, Alabama]
Here's how the US Attorney's Office, past 2 pm back on November 19, put it: "PARKER H. “PETE” PETIT, the former chief executive officer of MiMedx Group, Inc. (“MiMedx”), a publicly traded biopharmaceutical company, was convicted of securities fraud, and WILLIAM TAYLOR, the former chief operating officer of MiMedx, was convicted of conspiracy to commit securities fraud, to make false statements in SEC filings, and to mislead the conduct of audits."
On October 26, the trial began, and Inner City Press live tweeted it. Now here and below.
On November 16, the US Attorney's Office wrapped up their rebuttal and Judge Rakoff stepped into the witness box to give instructions:
Judge Rakoff just said he'll deliver his instructions from(plexiglass) witness box, so he can take off his mask. A juror is late...
OK - juror has arrived and MiMedx trial final argument by US Attorney's Office has begun: "They lied under oath... Why did they corrupt their positions? Out of greed, for the money. Pete Petit had $38 million in MiMedx stock.
AUSA: "Return versus repurchase, it's all nonsense. Bill Taylor admits this is the right of return email. He used the word repurchase, it's just proof of his guilty conscience. Don't be fooled."
Then after one admonition to wrap it up, the jury instructions began. Watch this site.
On November 10, an Atlanta-based auditor of MiMedx, then and now working for Cherry Bekaert, under government questions said that a $200,000 payment to Mark Brooks, characterized as a bribe, should have been discounted from the reported earnings, according to GAAP.
But on November 11 under cross examination, the auditor admitted that John Cranston was his main contact at MiMedx, and was shown that Cranston was on the e-mail chain about the payment to Mark Brooks. So shouldn't Cranston have told the auditor?
Inner City Press live tweeted the afternoon session on November 11, here:
Gov witness, seemingly the last, is SEC Financial Economist Carina Shambarry. There was another sidebar with Judge Rakoff before she started. AUSA: Did you review MiMedx? A: Yes. AUSA: Who asked you?
A: The US Attorney's Office... I looked at 2015 purchase orders
Shambarry: This is the inflated revenue of MiMedx for the 4th quarter of 2015... inflated by $2,990,675... that is, by 6.12%. They still missed guidance by about $600,000.
Now comes cross examination of Carina Shambarry. Q: So this stock sale by Mr Taylor was before any allegation of wrongdoing, right?
AUSA: Objection! Judge Rakoff: Lay a foundation.
Q: Were you given any info about purchase orders before the end of June 2015? A: No Now counsel says they're about to move on to another topic, suggests breaking for the day.
Judge Rakoff: I'm disappointed, but I'll bear up. Come to the sidebar. After a time, to jury: The gov will wrap up tomorrow. The defense will put on a couple of witnesses.
Judge Rakoff: We'll have the government's closing tomorrow afternoon, defense's on Friday. You can start deliberating sometime on Monday. We need to keep the pressure on. See you tomorrow at 9:45. [Jury leaves] Judge Rakoff, to lawyer: Let's make some motions.
Defense: We do have motions to make. Can we take a five minute break? Judge Rakoff: Sure. We'll deem that these motions are being made at the end of the government's case. Thread will continue.
Defense returns with a Second Circuit citation, 971 F.3d 380, about when making further objections would be unavailing - asks Judge Rakoff if that's the case here. It seems so. Talk turns to how the jury should be told about the power to grant immunity.
AUSA arguing that the evidence supports an instruction on conscious avoidance...
Judge Rakoff: Some judges don't like counsel to quote principles of law in summation. I am not one of those. Just make sure you quote my instructions, and not something you make up.
Judge Rakoff: You can says, the Government didn't meet its burden because no evidence of X or Y. What you cannot say is, They didn't call Mr. Jones as a witness... It's been a long day, and I still have to teach at Columbia."
On the morning of November 12, the defense got Ms. Shambarry to admit she had not reviewed how bonuses were paid to Petit and Taylor in 2013 and 2015 - that is, whether they would have gotten the same bonus whether or not they early-recognized revenue. The cross examinations were punctuated by objections, many of them sustained. But still the point was made. Next up: closing arguments.
Watch this site.
On November 9, after the AUSA said now the government might close its case on November 11, Veterans Day, Judge Rakoff said he had noticed - and that he had notice that the jurors did not appear bored by focused. He congratulated both sides' lawyers and told them to keep it up. So will we as the trial winds down.
On the morning of November 6, Bill Taylor's lawyer cross examined a government witness about why he had not complained internally if he thought the deal with Mark Brooks' company was wrong. It all got reported to Pete [Petit], he answered, adding that MiMedx General Counsel Lexi Hayden did whatever Petit said.
The government on re-direct tried to rehabilitate him, that he had been afraid of Petit's retaliation and had a family to support. But what about Taylor?
On the afternoon of November 6, talk turned to an informal application for a loan from Capital One by Jerry Morrison, whose business was said to be the sale of human tissue (for medical purposes). After a cooperator, or witness with a Non Prosecution Agreement, the AUSA said the government may rest its case by the end of next week. Judge Rakoff said he'll draft jury instructions and that the charging conference shouldn't take more than 72 hours, "bring your sleeping bag." We'll continue on this.
On the morning of November 5, cross examination of a government witness who worked for previous witness Carlton continued, focusing on his role as an "advocate" for Mark Brooks, and his characterization of the $200,000 payment to Brooks as being a bribe.
There were diversions into a text message about pizza -- "I like pizza too much, that's my problem," the witness said, perhaps ingratiating him to the jury. Judge Rakoff told the jurors to take 11 am to 12:05 pm for lunch, as he gave a Zoom speech to NYU; he told the lawyers to return at 12:01.
Day 5, Oct 30: Witness: Brooks had a lot of complaints, so I don't remember what was per se settled... We got the order afterwards. Defense: Call up Gov Exh 1018. Take a look at this. This is an email from Mr Petit to Mark Brooks, right? Witness: Right.
We're back. Carlton still on the stand. Q: You see Mr. Carlton this email says Mr Brooks had to forego the stock, for the $200,000? Carlton: Yes. Q: And Mr. Petit was on the email, as you were, and said - Judge Rakoff (to jurors) This is for state of mind
Q: You wrote that the $200,000 to Mr. Brooks was for lost business? Carlton: Not the case. It was for the stock.
Q: So you sent Bill [Taylor]'s email to Bassam? Carlton: Yeah because he missed the first one.
Q: But Mr Taylor's email said repurchase the product. It does not say returned.
AUSA: Objection! Asked and answered!
Judge Rakoff: I'll let it go for now... Have a good weekend.
[On the morning of October 30, Inner City Press formally asked for access to the government exhibits in this US v. Petit case. Watch this site.]
The case is US v. Petit et al., 19-cr-850 (Rakoff)
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