AUSTIN (May 10, 2013)—David Applegate, 54, a former executive of a medical device company, has pleaded guilty in Austin to defrauding investors and company shareholders.
Prosecutors say Applegate inflated earnings for ArthroCare Corp. through a series of end-of-quarter transactions that misrepresented the publicly traded companies sales and revenues.
Applegate admitted Thursday to conspiracy to commit securities and mail fraud, in addition to other charges.
Federal investigators say Applegate shipped products to a distributor for storage, but reported the shipments as sales, which enabled the Austin-based company to meet earnings forecasts.
The distributor agreed to accept shipment of about $37 million in products in exchange for cash commissions and other special conditions.
Applegate faces a maximum prison sentence of five years for each charge.
A sentencing date has not been scheduled.