Valeant Accused of Enron-like Fraud Via Phony Specialty Pharmacies | Pharmaguy's Insights Into Drug Industry News | Scoop.it
Shares of Valeant Pharmaceuticals tumbled on Wednesday after a research firm accused the drug company of massive fraud similar to what doomed Enron.


It's the latest controversy swirling around Valeant, a $50 billion pharmaceutical giant that's backed by hedge fund billionaire Bill Ackman. Federal prosecutors are already investigating the way Valeant prices and distributes its drugs.


Now Citron, a short-selling firm that publishes free research used to bet against companies, is making allegations that Valeant could be the "pharmaceutical Enron."


Citron pointed to what it sees as a "web of deception" that amounts to "fraud" aimed at creating "invoices to deceive auditors and book revenue."


Citron alleges that Valeant created a network of phony pharmacies "for the purpose of phantom sales" and to avoid scrutiny from auditors.


Citron is an activist short seller that has a team of investigators led by Andrew Left. 


This isn't the first time Citron has accused a health care company of shady behavior. The short seller noted in its Valeant report that in 2008 it exposed a relationship between medical device maker Arthrocare and Discocare. 


Top Athrocare executives were later found guilty of inflating sales figures and the company's former CEO was recently sentenced to 20 years in prison for securities fraud, according to media reports.