(Bloomberg) -- A short-seller who sought to expose accounting fraud at skin-graft maker MiMedx Group Inc. claimed in a defamation lawsuit that the company hired a private investigator to dig up information it used to try to discredit him.
Marc Cohodes filed the federal suit Wednesday in San Francisco against MiMedx, saying the snooping invaded his privacy, damaged his reputation and forced him to incur legal expenses. He’s seeking unspecified monetary damages.
A MiMedx spokeswoman, Hilary Dixon, said the company doesn’t comment on pending litigation.
“MiMedx is now guided by an entirely new leadership team and Board of Directors,” Dixon said in an email. “Our full focus is on the future, and continuing to make a difference in the lives of patients and their families by addressing areas of unmet need in advanced wound care and musculoskeletal degeneration.”
Cohodes and others had bet the shares of Marietta, Georgia-based MiMedx would fall, and he began publicly questioning the company’s finances in the fall of 2017. They alleged the company had defrauded the federal government and inappropriately booked sales of products that hadn’t been ordered.
That sparked a backlash by former Chief Executive Officer Parker Petit and MiMedx, which attacked short-sellers on its website. In late 2017, the company hired the private investigator, who befriended Cohodes and recorded their conversations over the phone, according to the lawsuit.
MiMedx spent months denying the fraud allegations. But in June 2018, the company said it would restate results as far back as 2012 based on the accounting treatment of sales and distribution practices. An internal probe completed in May 2019 found Parker had ordered a secret surveillance of workers in a bid to discredit whistle-blowers.
In November 2019, Petit and former Chief Operating Officer Bill Taylor were charged with securities fraud for allegedly inflating revenue to hide weak performance. They were convicted at trial in late 2020 and both sentenced to a year in prison.
The case is Cohodes v. MiMedx Group, 22-cv-00368, U.S. District Court, Northern District of California (San Francisco).
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