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Biotech / Medical : SABRATEK CORP (SBTK)

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To: mod who wrote (133)	6/15/1999 9:06:00 PM
From: Pluvia	Read Replies (1) of 487

*ACCOUNTING FRAUD ALLEGATIONS* Part 1 Following are excerpts from the law suit filed against SBTK that allege Fraudulent Financial Accounting and Reporting activities. We believe the sources for these allegation include persons directly involved in the transactions, including persons who may have been under oath during deposition. We also believe these allegations have been corroborated by several sources. We are substantially impressed by the detailed nature of the allegations, which include times, dates, persons involved and equipment involved. We do not believe the largest Class Action law firm in the world would offer detailed allegations this specific, without significant confidence in the evidence used as the basis for their allegations. *************************************** Fraudulent Reporting of Income on Phony “Sales”. ...Sabratek reported significant amounts of revenue on phony “sales” of products to entities which either did not exist or which had not ordered Sabratek products. For example: (i) In the last two weeks of the first quarter of 1998 (i.e. late March 1998), Sabratek shipped over $1 million worth of inventory (which included 500 pumps) to Tacy Medical of Fernandina Beach, Florida even though Tacy Medical (a medical goods distributor) had never ordered the product, had not submitted a purchase order for the product, and had no agreement with with Sabratek at that time to distribute its pumps. Sabratek ultimately induced Tacy Medical to keep the pumps only by agreeing to give it the right to distribute Sabratek products in Florida and by agreeing that its acceptance of the product was on an “on consignment” basis only (i.e., Tacy Medical had no obligation to pay for the product unless and until it was able to sell them to an ultimate end-user). ********************************

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