On November 2, 2017, Philip Jacoby, the former CFO of Osiris Therapeutics, Inc., pled guilty to one count of making false statements to auditors in connection with a review of Osiris’s 2014 10-K and third quarter 2015 10-Q filings.  In September 2013, Osiris agreed with the FDA that it would not sell one of its products, Ovation, after December 31, 2014.  An Osiris distributor wanted to continue to be able to access Ovation after that date, but was unable to pay for the $1.8 million worth of product that it wanted to purchase. Osiris thus allowed this distributor to hold $1.8 million of Ovation on consignment.  In December 2014, Jacoby requested that the distributor convert some of this product to its inventory (i.e., pay Osiris for it) so that Osiris could properly recognize revenue for the product in 2014.  Though Osiris and the distributor did not come to an agreement regarding the conversion of the consigned inventory until 2015, Jacoby still recorded $1.1 million in revenue for the product for the fourth quarter of 2014.  During a Public Company Accounting Oversight Board Inspection in October 2015, Osiris’s auditors requested more information about this improperly recorded transaction.  Jacoby repeatedly provided false information and backdated correspondence to the auditors in order to create the false impression that Osiris and the distributor had come to an agreement about the conversion of the consigned inventory before the end of 2014.  U.S. v. Jacoby, 1:17-CR-00676 (S.D.N.Y.)

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