Court’s Detailed Rejection of Plea Leads to New Bargain
A recent blog post summarized an opinion in which a district court catalogued his reasons for rejecting a corporate “C” plea involving a pharmaceutical company. Several developments have occurred since the court’s opinion including a plea and sentencing hearing scheduled for January 30, 2018.
Motion for a Pre-Plea Sentence Report
Aegerion, the defendant, moved for an order expediting the pre-plea presentence report as well as an expedited schedule for conducting a change of plea and sentencing hearing. The defendant noted that, since the court’s issuance of the order rejecting the guilty plea tendered by the defendant under Rule 11(c)(1)(C) of the Federal Rules of Criminal Procedure, the defendant and the United Stated engaged in negotiations for a plea agreement that would be submitted pursuant to Rule 11(c)(1)(B). The defendant requested an expedited schedule in light of the defendant’s “continued financial deterioration.” The defendant also noted that its ability to retain and recruit employees had been “severely impacted by the open, unresolved status of the criminal matter.” It argued that if the court waited to order the presentence report until the acceptance of the defendant’s guilty plea, the defendant’s financial challenges would be exacerbated.
The United States supported the defendant’s motion.
Expedited Schedule Granted
US District Judge William Young of Massachusetts granted the motion for a pre-plea presentence report and an expedited schedule for change of plea and sentencing hearing, setting the sentencing for January 30.
Shareholder Replies to Court’s Criticism of Corporate Defendants
The court received a letter from a shareholder in the defendant’s parent company, answering the question posed by the court: “[W]hy the government does not simply let Aegerion collapse in disgrace?”
The author stated that forcing Aegerion into bankruptcy would cause significant, adverse effects. First, the defendant offers medications to which there are no alternatives, and “[i]f the company goes bankrupt, it is not certain at all that another company would buy these products given their niche markets (i.e. smaller orphan drugs), and complicated distribution and reimbursement systems.” Second, until the court matter is resolved, it is “impossible” for the company to access capital markets to get funding to pay for certain clinical trials. Next, the people who committed the crime are no longer at the company, and many of the current employees at the company remain because of a merger which occurred after the crime was committed. Finally, the majority of current shareholders never owned Aegerion shares, and voted for the merger because it was “believed that a reasonable settlement had been reached.”
The shareholder felt the court “ignored” precedent, “and used Aegerion in [its] broader crusade against ‘C pleas.’” The parent company’s share price has fallen, and it is in danger of being delisted. The author concluded that if the company is forced into bankruptcy, “I look forward to your ruling and explanation as to why current and future patients, employees, and shareholders should all experience total losses despite having nothing to do with the crime.”
New Plea Agreement Pursuant to Rule 11(c)(1)(B)
The United States filed a plea agreement pursuant to Rule 11(c)(1)(B). The defendant will waive indictment and plead guilty to an information charging it with two misdemeanor violations of the Federal food, Drug, and Cosmetic Act. Under subsection (B), the government agrees to recommend, or not oppose a defendant’s request, that a particular sentence or sentencing range is appropriate or that a particular provision of the Sentencing Guidelines, policy statement, or sentencing factor does not apply. This recommendation or request does not bind the court.