Firm Settles With Justice for Manipulating Manufacturing Data
Leiner Health Products agreed to forfeit $10 million and plead guilty to one count of wire fraud under a proposed settlement with the Justice Department concerning charges that the firm manipulated stability data at its OTC production facility.
Justice alleges that the manipulation occurred in December 2006 at Leiner’s Fort Hill, S.C., plant. The company said it has revamped its entire quality control operation and the facility has been discontinued.
According to a motion submitted by Leiner to the U.S. Bankruptcy Court for the District of Delaware, the settlement would resolve charges that the firm “gave the false appearance that certain drugs had passed stability testing and allowed nonconforming drugs to be shipped to customers.”
The company, which is in Chapter 11 bankruptcy proceedings because the quality control problems have affected sales, is asking the court to let it enter into the plea agreement.
Leiner said it expects bankruptcy proceedings to be completed June 11. The company will be auctioned off roughly at the same time. The firm derived 25 percent of its sales from its OTC business, primarily from subsidiaries in Canada.
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