PALISADES: Former pharma CEO plundered millions from his own company, DOJ says

 

What not to do with millions of dollars of a pharma company's cash? Don't allegedly cover personal credit card bills and pay for tuition for your child's private school, for two.

The former chief executive and owner of a New Jersey drugmaker has been arrested for allegedly embezzling millions of dollars from his own company, a Department of Justice (DOJ) complaint issued Monday shows. The accused, 75-year-old John Klein of Palisades Park, New Jersey, has been charged with one count of wire fraud. He was scheduled to appear over video before a judge on Monday.

Klein allegedly took about $3.9 million from a customer and transferred it into a company bank account he controlled in May 2016, all while maintaining that the bill hadn't been paid, the DOJ says. After Klein made the transfer, he used the money for multiple personal expenses, including credit card payments for himself and his wife, property taxes and tuition for his child's private school, the DOJ complaint says.

All the while, Klein let the company present the situation as though the money hadn't been received, authorities say.

In July 2016, Klein hired a new chief financial officer who was tasked with creating a profit and loss statement of the company's sales and money owed. The CFO says Klein provided an account receivable of approximately $3.9 million from a customer that had not been collected, according to the DOJ complaint.

In December 2016 and January 2017, the company, with Klein's knowledge and approval, tried to write off the $3.9 million as unpaid debt. This was after Klein allegedly acknowledged in a June email that all invoices related to the roughly $3.9 million had been paid in full.

The wire fraud charge is punishable by up to 20 years in prison, the Justice Department says. Klein could also face financial penalties, according to the DOJ.

The DOJ complaint didn't name Klein's company, though his online biography and other court filings identify him as the chief executive of Cambridge Therapeutic Technologies, AP News reports. The Teaneck, New Jersey-based company was in the business of drug packaging and distribution, the publication said. Former Cambridge CEO Mark Adams told AP News over email that Klein's actions caused the company to go out of business.