The former CEO of Tennessee biotech Provectus treated the company as his “personal piggy bank,” taking millions of dollars from the business, according to the Securities and Exchange Commission.
Craig Dees and Provectus’ former finance chief Peter Culpepper have both been charged in connection with the SEC probe, which claims they received $3.2 million and a little under $200,000, respectively, in “unauthorized and undisclosed perks and benefits.”
Dees used the money obtained from fabricated expense claims to purchase cosmetic surgeries for female friends, restaurant tips and personal travel, while Culpepper received payments for business travel that he used for unauthorized personal expenses. The SEC says that situation was allowed to occur because the biotech had lax controls on travel and entertainment expenses submitted by executives.
Stephanie Avakian, co-director of the SEC’s enforcement unit, said that these payments “can be material information, and companies must ensure that the perks they pay for executives are properly recorded and disclosed in public filings.”
Provectus “failed to give its shareholders all of the relevant information about how its top executives were being compensated by the company,” she added.
The Knoxville biotech—which sacked Dees in January and temporarily replaced him with Culpepper before firing him too when the SEC investigation came to light—said in a statement that it has already taken steps to remedy its internal processes and has agreed on a settlement with the regulator that means it will not have to pay any monetary penalties.
The company’s chairman Dominic Rodrigues said the settlement would allow it to concentrate its efforts on its pipeline, and specifically its two clinical programs—small-molecule oncolytic therapy PV-10 for solid tumors which was rejected for a breakthrough designation by the FDA in 2014, and PH-10, a topical application for psoriasis.
In October, the company reported preliminary results from a phase 1b trial of PV-10 in combination with Merck & Co’s Keytruda (pembrolizumab) in melanoma.
Since firing Dees and Culpepper, Provectus’ president Tim Scott has been at the helm of the company, with assistance from chief operations consultant Bruce Horowitz.