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Biotech / Medical : SABRATEK CORP (SBTK) -- Ignore unavailable to you. Want to Upgrade?

To: mod who wrote (133)	6/15/1999 9:06:00 PM
From: Pluvia	Read Replies (1) \| Respond to 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). ********************************

To: mod who wrote (133)	6/15/1999 9:19:00 PM
From: Pluvia	Read Replies (1) \| Respond to of 487

*ACCOUNTING FRAUD ALLEGATIONS* Part 2 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. ********************************************** Improper Recognition of Revenue on Phony “Sales” Pursuant to Fraudulent “inventory Parking” Arrangements. Sabratek also engaged in fraudulent “inventory parking” arrangements, whereby the Company reported revenue on phony “sales” to certain of its distributors or to “friendly” warehouse operators who, as part defendants' fraudulent scheme, placed phony “orders” for Sabratek products and/or accepted the receipt of (or “parked”) Sabratek inventory which they had not, in fact, bona fide ordered. (i) For example, during the second quarter of 1998, defendant Stephan Beal (Sabratek's Vice President of Sales) personally arranged to ship at least several dozen 60/60 pumps (worth at least $150,000, and in all likelihood substantially more than that) to a “front” dealer in Ohio. Although recorded as “sales” and reported as revenue on Sabratek's book in order to help Sabratek's quarterly sales numbers, in fact these pumps simply sat in the Ohio warehouses of Sabratek's “dealer” pending further instruction from Sabratek as to how to ultimately dispose of these “parked goods. Improper Recognition of Revenue on Products Shipped Subject to Unlimited Rights of Return (booking revenue on “consignment” sales). Because the Company had a general practice of recognizing revenue upon shipment of product to its distributors, defendants were able to-and did-help conceal the increasing weakness in the demand for Sabratek products by inducing the Company's distributors and resellers to purchase more product than they needed. Throughout the Class Period, one of Sabratek's favorite tactics to increase its reported “sales” was to induce its distributors to accept shipments of product “on consignment” (i.e., with the promise that the distributors could return their shipments of Sabratek products at any time and for any reason if they were not sold). (i) For example, throughout the Class Period Saratek used its realtionships with distributors (such as Amtec Medical (of Texas), Healthcare Tech (of Massachusetts), CoMedical Inc. (of Seattle, WA), and Clinical Technologies (of Ohio) to dump excess inventories of Sabratek products for which there was no present demand by shipping them large amounts of products under terms which granted them essentially unlimited rights of return. In one such notable transaction Sabratek induced Medical Specialties, Inc. (formerly known as I.V. Support) to “order” 500 pumps (worth over $1 million) by promising it that it could return the pumps at the end of 1998 for credit. Such practices enabled the Company to improperly book millions of dollars of sales and revenue on transactions as to which there were no real purchases and as to which Sabrateck held a continuing and substantial risk of loss. (ii) At all relevant times, defendants knew or recklessly disregarded that these transactions were not in fact bona fide sales and were improperly reported as bona fide sales in violation of GAAP. Nonetheless, defendants failed to disclose these facts to the unwitting investing public, and instead affirmatively and repeatedly misrepresented that its published financial results were prepared in accordance with GAAP. ******************************************

To: mod who wrote (133)	6/15/1999 9:28:00 PM
From: LTK007	Read Replies (1) \| Respond to of 487

So I must then assume that post 119 from Pluvia you choose to dismiss as not something you would read nor consider ---this describes rank deception to create an impression that they full well knew to be false--this is fraud(fraud for the purpose of pumping their stock price), and fraud in the legal sense of the word. And why not halted,CAND(CANDE) has been halted for quite some time now--why should they not lose the auditor,and they must then have a re-audit,just like with CANDE(another company in which management deceived analysts) This is not some class action suit that is typical with company like COMS that comes in with a bad earnings and stock tanks and angry shareholders sue ---SBTK is showing signs of a systematic deception,the proverbial can of worms. For the record,a friend of mine who works to set up at home health care says those Hi Tech devices can't make money because Medicare has a rigid allotment cap that doesn't come close to paying for the use of these devices,the market is a deadend,in their opinion.Max90