Walter Eisner • Wed, June 4th, 2014
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Michael Baker and Michael Gluk have been found guilty of fraud by a federal jury in Austin, Texas, for their part in ArthroCare Corp. shareholders losing over $400 million in value in 2008.
Baker was immediately taken into custody, pending sentencing.
Fraud and False Statements
Baker, the former company CEO, and Gluk, the former CFO, were convicted on June 2, 2014, for artificially inflating sales and revenue numbers to meet company sales projections. Specifically, Baker was found guilty of conspiracy to commit wire and securities fraud, wire fraud, securities fraud and false statements. Gluk was found guilty of conspiracy to commit wire and securities fraud, wire fraud and securities fraud.
New Management
Baker resigned in February 2009 after the company announced that the U.S. Securities and Exchange Commission (SEC) and U.S. attorneys were investigating its business practices. Gluk resigned in December 2008. New management entered into a two-year deferred prosecution agreement with the company, and in January 2014, the company said it would pay a $30 million fine to resolve the SEC investigation.
ArthroCare was recently acquired by Smith & Nephew for $1.7 billion. The company employs about 1,800 people, including about 280 in the Austin area.
