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Ex-Arthrocare CEO Baker Should Get 30 Years, U.S. Says

Arthrocare Corp.’s former Chief Executive Officer Michael Baker, found guilty in June of a $400 million securities fraud, should get 30 years in prison, the U.S. said in a recommendation to the judge overseeing the case.

Baker’s accomplice, ex-finance chief Michael Gluk, deserves 20 years in prison for his role in the fraud, prosecutors said. Both men face sentencing today before U.S. District Judge Sam Sparks in Austin, Texas.

Baker and Gluk were convicted in June of conspiracy and wire fraud for running a “stuffing” scheme from 2005 until 2009 that “parked” millions of unneeded medical devices with distributors at the end of each quarter.

Both men objected to estimates by the U.S. Probation and Pretrial Services System calculating losses from the fraud at $958.4 million. Prosecutors asked Sparks to use a “conservative estimate” of $756.1 million to calculate restitution.

Neither man showed remorse for almost destroying the Austin-based company, which has more than 1,000 employees, prosecutors said. In addition to the prison term, prosecutors asked Sparks to impose five-year probation terms and order $25 million in judgments against both men, according to court papers filed Aug. 22.

Baker and Gluk’s scheme collapsed in 2008 after allegations of fraud triggered an internal investigation. Arthrocare’s shares fell 42 percent after the company announced in July 2008 that it would restate earnings for the previous seven quarters.

The case is U.S. v. Baker, 1:13-cr-00346, U.S. District Court, Western District of Texas (Austin).

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