The former chief financial officer of the Austin-based ArthroCare Corporation was sentenced Friday to 50 months in prison for his role in a fraud scheme that the U.S. Department of Justice said resulted in shareholder losses of over $750 million.
Michael Gluk, 59, of Austin was also ordered to pay $50,000, the USDJ said.
According to a release from the USDJ, Gluk pleaded guilty to superseding information on June 14, 2017, charging him with one count of conspiracy to commit wire and securities fraud. As part of the plea, the USDJ said Gluk admitted that he conspired with others to falsely inflate ArthroCare sales and revenue through a series of end-of-quarter transactions involving ArthroCare's distributors.
The release states Gluk also admitted that he and other co-conspirators caused ArthroCare, a publicly traded medical device company, to file a Form 10-K for 2007 and Form 10-Q for the first quarter of 2008 with the U.S. Securities and Exchange Commission (SEC) that materially misrepresented ArthroCare's quarterly and annual sales, revenues, expenses and earnings. Further, as part of his guilty plea, Gluk admitted that he provided false testimony in proceedings before the SEC and in federal district court.
The USDJ said the fraud scheme at the company began in 2005 and continued until 2009.
According to the release, Gluk's previous conviction was overturned by the U.S. Court of Appeals for the Fifth Circuit. The USDJ said he subsequently pleaded guilty and went against co-conspirator Michael Baker, the former CEO of ArthroCare. Baker was convicted at trial on Aug. 18, 2017, of conspiracy to commit wire fraud and securities fraud, seven counts of wire fraud, two counts of securities fraud and two counts of making false statements. He was sentenced to 240 months in prison.
Additional co-conspirators David Applegate and John Raffle, both former senior vice presidents of ArthroCare, pleaded guilty to multiple felonies in 2013 in connection to their participation in the scheme, the USDJ said. Raffle was sentenced to 80 months in prison On Aug. 29, 2014, and Applegate was sentenced to 60 months in prison.