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Drugmaker settles SEC charges over not reporting perks

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Drugmaker settles SEC charges over not reporting perks

A Tennessee biopharmaceuticals company has reached a settlement with the U.S. Securities and Exchange Commission over its failure to report millions of dollars in perks provided to its former CEO and chief financial officer, but it has not incurred any penalty.

The SEC said in its statement Tuesday that Knoxville, Tennessee-based Provectus Biopharmaceuticals Inc. lacked sufficient controls surrounding the reporting and disclosures of travel and entertainment expenses submitted by its executives.

It said that former CEO Dr. H. Craig Dees obtained millions of dollars from the company “using limited, fabricated or nonexistent expense documentation” that was not disclosed to shareholders. It said the company’s former CFO, Peter R. Culpepper, also allegedly obtained more than $199,000 in unauthorized perks and benefits.

Dr. Dees was separately charged in U.S. District Court in Knoxville in treating the company “as his personal piggy bank,” said the statement. It said he had submitted hundreds of falsified records to obtain $3.2 million in cash advances and reimbursements for business travel he never took, according to the SEC statement.

Provectus and Mr. Culpepper have agreed to separate cease-and-desist orders without admitting or denying the SEC’s findings, the SEC said.

Steven Pekin, co-director of the SEC’s enforcement division, said in the statement: “The SEC’s settlement with Provectus — which does not include any penalty — takes into account the proactive remediation and cooperation by the company’s new leadership. Provectus fired wrongdoers, took other steps to remedy its controls, and provided SEC staff with critical information regarding its former executives’ expense reimbursement abuses.”

Provectus Chairman Dominic Rodrigues said in a company statement: “We are grateful to commission staff for working with Provectus to conclude the SEC investigation of the company. We also appreciate that the SEC recognized prompt and specific remedial acts by Provectus as well as the cooperation afforded to commission staff by the company during the investigation.”

“We believe Provectus has addressed the material weaknesses identified in our settlement with the SEC. Provectus may not yet conclude that internal controls over financial reporting are presently effective because remediation testing has not been conducted for a sufficient period of time. Achieving effective controls is the company’s near-term goal,” he added.

Mr. Culpepper has agreed to pay a civil penalty of $152,376 and is to be suspended from appearing before the SEC as an accountant, according to the SEC statement.

Dr. Dees’ attorney had no comment. Mr. Culpepper’s attorney could not be reached for comment.