In the Matter of Alere Inc. (2017)

• Case Name
• In the Matter of Alere Inc. (2017)

• Date Filed
• 09/28/2017

• Enforcement Agency
• SEC

• Countries
• Colombia, India, China, Ireland, Israel, South Africa, Korea, South

• Foreign Official
• Unnamed government officials in Colombia and India.

• Date of Conduct
• 2011 to 2016

• Nature of Business
• Alere Inc., a Delaware corporation headquartered in Waltham, Massachusetts, is a manufacturer and seller of medical diagnostic devices.  The company maintains stock that is registered with the SEC under Section 12(b) of the Exchange Act and trades on the New York Stock Exchange.  

• Influence to be Obtained
• According to the SEC, Alere prematurely recorded more than $260 million in revenue in its financial statements and made improper payments to government officials in Colombia and India that were not accurately recorded in the company’s books and records.  Executives at Alere’s subsidiaries in South Korea, Israel, South Africa, Ireland, and China allegedly violated the company’s accounting procedures between 2011 and 2016.  Alere, which grew rapidly in the 2000s and early 2010s by acquiring a number of foreign companies, established procedures to conform to U.S. generally accepted accounting procedures (“GAAP”).  However, the company’s finance department, headquartered in Massachusetts, delegated revenue-reporting authority to executives at Alere’s foreign subsidiaries; those executives and their employees allegedly falsified sales to meet revenue targets.  Employees at Alere’s South Korean subsidiary, for example, repeatedly falsified shipping documents to suggest that the company had sold equipment and subsequently reported those false sales to Alere’s finance department.  The SEC alleges that Alere prematurely recorded more than $260 million in revenue.
  
  In addition to the revenue misreporting, Alere’s subsidiaries in Colombia and India reportedly paid government officials to win sales contracts for the company’s products.  From 2007 through 2012, Alere’s Colombian subsidiary paid approximately $275,000 to a government client responsible for procuring medical products; that client ultimately purchased $7.8 million in Alere testing devices on behalf of the Colombian government.  Alere’s subsidiary masked the payments as fees for consulting services, although no such services were provided.  Meanwhile, in 2011, Alere’s Indian subsidiary won a contract with a local government to supply 200,000 malaria testing kits.  Acting through a conduit who communicated with the subsidiary, the government officials allegedly offered to increase the order to 1,000,000 kits in exchange for a four percent sales commission.  According to the SEC, Alere agreed to the arrangement, which generated approximately $150,000 in profit.

• Enforcement
• On September 28, 2017, the SEC settled its enforcement action against Alere for violations of the FCPA’s books-and-records and internal controls provisions.  According to the cease-and-desist order, Alere agreed to pay $3,328,689 in disgorgement, $495,196 in prejudgment interest, and a $9.2 million civil penalty—totaling $13,023,885 in sanctions.

• Amount of the Value
• $275,000 (Colombia); four percent sales commission (India).

• Amount of Business Related to Payment
• Approximately $3,300,000 in profit.

• Intermediary
• Unnamed India-based distributor.

• Citizenship of Parent Entity
• United States

• Total Sanction
• $ 13,023,885

• Compliance Monitor
• No

• Reporting Requirements
• No

• Case is Pending?
• No

Alere Inc. 

• Citation
• In the Matter of Alere Inc., Admin. Proc. File No. 3-18228 (September 28, 2017).

• Date Filed
• 09/28/2017

• Filed Under Seal
• No

• FCPA Statutory Provision
• • Books-and-Records
  • Internal Controls

• Other Statutory Provision
• None

• Disposition
• Cease-and-Desist Order

• Defendant Jurisdictional Basis
• Issuer

• Defendant's Citizenship
• United States