May 7, 2019 – For completeness, please find Ebix’s legal letter to Viceroy, dated April 1, 2019, below:
We are responding to Ebix’s claims in full on twitter:
JANUARY 10, 2019 – Pretium released the Brucejack Mine’s Q4 2018 production update yesterday after-market, and market reaction shows it fell short of expectations. Pretium’s ore grade has predictably fallen since Q2 2018 by >22%, leading to a miss of Pretium’s H2 low-end gold production guidance of 200,000 ounces. At 11.5g/t, Pretium’s head grade is now 30% below feasibility study sampling.
Per our previous reports, Viceroy believe Pretium’s grades will continue to fall as Pretium appear to be at the tail end of extracting high-grade deposits found along the Cleopatra Vein. As a reminder to our readers, we have appended this section of our thesis to this note.
Pretium have attributed their production and grade shortfall on their grade control system, which they state will be refined. We believe this is an unnerving excuse, and have provided substantial evidence to support our thesis that Pretium is overmining or selectively mining its deposits.
Production capacity increases of Pretium’s mill will not fix this problem.
Viceroy was astonished at the >10% PVG stock decline on massive volume on January 8, 2019, prior to any announcement by Pretium. This is likely related to earlier bullish sentiment disseminated by The Globe and Mail, who reported Barrick was ‘eyeing’ Pretium.
We find it highly unlikely that Barrick would consider Pretium as an acquisition given it’s performance and grades have fallen well below expectation, and would likely not meet internal IRR criteria.
Pretium has failed to address in any depth the issues raised in our report including:
We maintain that Pretium is fundamentally overvalued, and see limited value in its current form.
JANUARY 7, 2019 – Ebix has characteristically ramped its press-release flow since the publication of Viceroy’s initial report and continued its acquisition spree. This report concerns management’s disregard for corporate governance, lack of transparency and due diligence.
Ebix Inc (NASDAQ: EBIX) have come out with multiple acquisitions and service “deals” since our multiple publications on the Company. On further investigation, we found that one of Ebix’s announced contracts had not yet been finalized. Ebix retracted its press release about a Dubai Forex Services contract: investors were misled on the status of the contract.
This is a major red flag, and exaggerates what we believe is an already extremely high risk investment strategy at Ebix.
Investors will note that Ebix have avoided commenting on the audit committee’s recommendation for Ebix to retain the services of Top 4 Auditor for regulatory reasons. We can only assume the Top 4 preferred to give ad hoc accountancy advice rather than full audit responsibilities.
This report will also dive into Ebix’s near-miss attempted acquisition of now-insolvent Patriot National, which the company was looking to acquire just before its spectacular collapse.
Ebix have so far decided to have fireside chats with investors while referring to our work as an old short thesis. Ebix have refused to account for Robin Raina’s poison pill bonus, the treatment of goodwill and the accounting irregularities.
Our research into Ebix is ongoing however we believe the information puts into context Ebix’s recent announcements. We will shortly publish further data pertaining to the Ebix group’s internal cash movements.
Publicly available financials suggest the Robin Raina Foundation shares similar financial discrepancy issues and poor disclosure practices as Ebix.
One of the Ebix’s CEO’s biggest self-promotion points is his commitment to charity. Kudos.
As part of our due-diligence process, Viceroy has conducted background checks into Ebix’s directors and their ventures. When diving into the Robin Raina foundation, we found inconsistencies between Robin Raina’s self-promotion of the Robin Raina Foundation (RRF) and the financial accounts of the foundation and its affiliates, and licensing issues across the US and India.
DECEMBER 13, 2018 – Ebix’s Mumbai office was “searched” by Indian tax authorities in Q3 2018. In other news, CEO Robin Raina claims Ebix has never “been on the wrong side of any regulatory or tax authority”.
Viceroy released its preliminary report on Ebix – titled Goodwill Hunting – on 11 December 2017, the contents of which we also discussed at the Kase Learning conference in New York on December 3, 2018.
This report will address the totally inadequate response Ebix issued on December 12, 2018, which was substantially an attempt at authority bias by CEO Robin Raina. Accordingly, we will also shine a light on the statements Raina decided to include in this press release, which we believe to be extremely misleading.
Viceroy’s original report can be found here:
Ebix’s press release on December 12, 2018 can be found here:
Accounting irregularities, undisclosed tax investigations, auditor shuffling, poison pill to protect short sellers: welcome to Ebix.
DECEMBER 11, 2018 – Following on from our presentation of the same title, Viceroy are releasing our preliminary report on Ebix, Inc (NASDAQ:EBIX). Our investigation has uncovered accounting discrepancies dating as far back as 2008 to present day as well as several other red flags.
Due to the delay in availability of subsidiary accounts, and the rapidly expanding nature of the company’s operations we are unable to quantify a base downside. We believe it is highly likely given the progress of the shareholder litigation that regulatory authorities including the SEC open or reopen their investigations into the company. Accordingly, we believe that Ebix carries a high investment risk.
On November 28th, 2018 Viceroy Research released a report regarding NEPI Rockcastle (JSE: NRP) detailing what we believed to be over-inflated profits in the company’s Romanian operations. NEPI issued a response to our research and hosted a call for concerned investors.
Unusually NEPI provided some clarity in terms of their accounting treatments. We maintain our belief that NEPI is fundamentally overvalued with reservations regarding the sustainability of distributable income, the tax treatment in foreign jurisdictions and the status of the overall company. This we will update on.
We reiterate our belief that NEPI Rockcastle’s shares carry a high investment risk and are fundamentally overvalued, which will become increasingly unattractive over time given what we believe are unsustainable distribution practices.
The Alchemy of Creating Profits
Viceroy’s presented Ebix at the Kase Learning Conference on December 3, 2018. We will shortly release a full report into our findings.
Summary red flags:
November 28, 2018 – Viceroy published its report on NEPI Rockcastle on November 28, 2018. NEPI Rockcastle have subsequently issued a preliminary response to our report.
We note that our data was sourced directly from NEPI’s filings, government records, and court records. Where we have conducted calculations, our analysis and workings have been show in full. Investors have the ability to determine the veracity of our analysis and conduct their own due diligence.
We are not of the opinion that NEPI has consistently proven transparency towards shareholders, the latest example of which is the outright refusal to engage an independent party to investigate potential trading of associated companies, suspicious capital raising activity and property transactions, at the request of 10 of South Africa’s largest financial institutions (including Government fund managers).
In stark contrast to any “reasons” NEPI provides for accounting discrepancies, investors should also note with extreme caution that the Company failed to provide details of outgoings, arrears, management matters, negotiations, rent reviews, to its valuers, Cushman & Wakefield. This was not an issue for all its other geographies.
Further to this, analysis of NEPI’s Romanian portfolio accounts show the company has, on average, 80 days of accounts receivable. This is indicative of substantial rent arrears, and fails the company’s claim of a 99.9% collection rate. These issues are independent of where earnings have been recognized, if this should indeed be NEPI’s response, and would not account for discrepancies in taxes paid in foreign jurisdictions.
We look forward to NEPI’s comprehensive response to our report.
Irreconcilable international earnings, enriching management through M&A, hoodwinking investors through misleading analysis via rejection of independent investigation.
NEPI Rockcastle (JSE:NRP) is a JSE-listed entity holding one of the largest real-estate investment portfolios in Eastern Europe. Viceroy’s investigations have uncovered numerous inconsistencies within NEPI Rockcastle’s financial reporting and major links to an established financial fraud:
Based on our analysis, we see a significant downside to NEPI’s share price driven by an unwarranted overvaluation and the likelihood of substantially lower-than-reported earnings. Were NEPI to trade in-line with peers we believe shareholders would face an 25% downside, however, given the suspected extent of financial misrepresentation, we believe the company’s shares are worth substantially less.
We believe stakeholders should reinforce their demands for an independent forensic investigation into the company’s operations and veracity of its financial consolidation and tax compliance. Until such time, Viceroy believe NEPI carries a high investment risk.
For more research into the Resilient Stable, readers should refer to the leaked internal memo by 36One Asset Management which we believe was published around the end of 2017. A Scibd link to this report is below. Viceroy have no business relationship with 36One Asset Management and have never discussed NEPI Rockcastle with them.
OCTOBER 15, 2018 – Request for investigation into perceived/potential conflict of interest.
On July 2, 2018 MiMedx announced the resignation of MiMedx CEO and Founder, Parker H. Petit, and the appointment of Mr. David Coles, a Managing Director of Alvarez & Marsal, as the company’s interim CEO.
The appointment of Mr. Coles follows MiMedx’s engagement of KPMG and King & Spalding, who we understand have been tasked with, among other things, conducting an independent internal investigation into MiMedx sales practices .
Viceroy understands that a key element of these internal investigations concerns MiMedx’s conduct with the United States Department of Veteran’s Affairs (DVA); specifically, the allegations of channel stuffing and the subsequent indictment of DVA physicians utilizing MiMedx products. These physicians are in the process of cooperating with the US Attorney General’s case in relation to the charges alleged in the criminal filings including receiving bribes and inducements, and over-use of MiMedx product within the VA.
Viceroy Research has been made aware of links between other Alvarez & Marsal and a cohort of individuals allegedly exercising undue influence over the DVA, colloquially referred to as the “Mar-a-Lago Crowd”.
Given the depth of investigations occurring at MiMedx relating to the company’s conduct with the DVA, Viceroy believe the appointment of Alvarez & Marsal represents an irremediable conflict of interest to MiMedx’s ongoing internal investigations, and to the investigations we understand are ongoing within the DVA and other federal regulatory entities.
We have addressed a separate letter to the Department of Justice and the DVA’s ethics committee outlining what we believe is a serious conflict of interest and undue influence within the DVA of several parties.Further, we believe that it is irresponsible that this group, when exposed by journalists, was saved from a congressional hearing by longtime friend of former MiMedx CEO Petit, Senator Jonny Isakson, who has benefited greatly from donations from MiMedx and Petit.
Enclosed is a brief report detailing our investigation into this matter. A more comprehensive report will be published post VA OIG approval. The PCAOB and Investigators has stated that “When an auditor is confronted with multiple indicators of problematic revenue recognition … he or she must get to the bottom of the relevant issues, including digging into management’s representations.” We stand ready to assist in this effort and sincerely appreciate your attention to this extremely important matter.
Viceroy detail Pretium’s unannounced departure of Brucejack’s General Manager just 12 days after our initial report (NYSE:PVG).
SEPTEMBER 18, 2018 – Viceroy continues its coverage on Pretium Resources Inc. This report will detail what appears to be an exodus of personnel from Pretium since the start of the operation at the Brucejack mine.
Notably, the General Manager of Pretium’s Brucejack mine, Kevin Torpy has just resigned from the company. This was not announced by Pretium, but instead by Torpy’s new employers: Titan Mining Corporation – a microcap zinc explorer – on 17 September 2018.
Yet again it is left to Viceroy to inform Pretium stakeholders of key developments.
Viceroy addresses Pretium’s revised ARR and presents new evidence supporting overmining thesis. (PVG:TSX / PVG:NYSE)
SEPTEMBER 11, 2018 – On 6 September, 2018, Viceroy research published its first report on Pretium Resources detailing what we believe is a scheme to distort the company’s mining results and inflate the projected reserves of the company’s Brucejack mine.
On September 10 Pretium issued a press release correcting its 2017 Annual Reclamation Report, the contents of which were used in Viceroy’s original report. We believe this is a badly thought-out attempt at damage control for the following reasons:
Investors must seriously consider the implications of Pretium’s financial and operational figures should they choose to accept that no overmining has occurred. Further, they should question management as to their responses to our findings, instead of confining their responses to fireside chats with sell-side analysts.
Viceroy continue to believe that Pretium’s grades will fall significantly, operating metrics/analysis has been distorted, and assets will be seized by its secured creditors as collateral as the company is overburdened by debt.
Viceroy maintains its belief that Pretium’s equity is likely worthless.
Distorted grades, involvement of SEC sanctioned entities, and high turnover of mineral consultants – Pretium flies many red flags. (PVG:TSX / PVG:NYSE)
SEPTEMBER 6, 2018 — Pretium Resources owns and operates the purportedly high-grade Brucejack gold mine in Northwest British Columbia in Canada. Viceroy is short Pretium Resources, as our research suggests its mining results have been distorted and the equity likely worthless as the overindebted company bleeds cash over the next 12 months:
The implications of our findings on grade, tonnage and life of mine are damning and lead us to believe that Pretium’s equity is highly likely to be worthless in its current state, and its credit significantly impaired.
Viceroy believe Pretium bears striking resemblance to Rubicon Minerals, now operating as a shadow of its former self after revising mineral reserve estimates down ~90%.
We believe the most likely scenario is that Pretium’s assets are seized by its secured creditors as collateral.
More ties to Forest Park, active breach of federal sales regulations, knockback of “independent” research and the dead-on-arrival of international expansion.
The fraud at MiMedx continues to unravel as the company announced it would have to restate more than half a decade’s worth of financials, doctors receiving bribes from MiMedx and that its short selling commentary cannot be relied upon. Viceroy have identified further issues with the company including:
For further background on this issue, please refer to Viceroy’s MiMedx Greatest Hits report:
Viceroy are happy to report that, as of this morning, MiMedx has removed ~50 incriminating “short selling commentary” responses to critics, including Viceroy Research, Aurelius Value, Marc Cohodes, journalists and employees.
It is our belief that Capitec management have continued to mislead investors since our previous correspondence with the company.
End-of-financial-year announcements in 2018 are reflective deteriorating business conditions and corroborate the continuity of several intentionally misleading accounting practices we have reported in the past.
We have again entertained Capitec’s invitation to field questions regarding its business.
An open letter to Capitec’s Audit Committee can be downloaded below:
In this instance, we are addressing the audit committee with our concerns, as they relate to broader financial reporting transparency and flawed management analysis, corroborating our previous analysis of unsustainable business practices.
Our continued review of Capitec’s practices and financial results leads us to believe management’s delivery of analysis to stakeholders is extremely misleading, and not at all reflective of declining business fundamentals.
This report will follow issues we have raised in previous reports and correspondence with management. You can find all of these reports on our website:
Over the past eight months, Viceroy have conducted an investigation into MiMedx Group, Inc (NASDAQ:MDXG). We have presented our research over the course of 20+ reports which can be on our website.
In the interest of those who have only recently begun following the story, Viceroy have decided to consolidate the major aspects of all 20+ reports into one document, organized by topic.
This is still a lengthy document however readers should be conscious that it is a combination of over 20 separate reports, which collectively is still small sample of the hoard of data Viceroy have provided to regulators.
When we began our investigation into MiMedx we were shocked by the sheer volume, brazenness, extent and historic precedence of the fraud being perpetrated by the company. MiMedx management has yet to acknowledge any wrongdoing, remaining unrepentant despite the existence of several federal investigations into the company.
We reiterate our opinion that due to the overwhelming nature and amount of evidence against the company we believe MiMedx is a robust fraud, entirely uninvestable, and worth $0.00.
We encourage any persons with further evidence of fraud within MiMedx’s operations to lodge an anonymous report with regulators through the following channel.
Alternatively, Viceroy are happy to take the heat on publishing more evidence of malpractice at MiMedx, which we will treat with the utmost level of confidentiality. You can reach us at firstname.lastname@example.org.
Further reading on MiMedx’s criminal activity can also be found on:
Discoveries by CTS Labs’ research into AMD flaws eliminate AMD’s competitive advantage in enterprise server segments and the company’s price competitiveness in retail aspects can no longer be justified.
PDF Download Link
The company’s rhetoric is that this is a non-issue hinges on the non-argument that administrator access must be established in order to exploit the vulnerabilities identified by CTS. This is short-sighted as the surrounding statement that most hackers will not have the know-how to exploit these vulnerabilities.
CTS have recently released a video showing the exploitation of AMD’s vulnerabilities to completely circumvent Windows Credential Guard and obtain decrypted passwords. AMD management specifically highlighted Windows Credential Guard as a key obstacle to the execution of CTS Labs’ identified exploits.
The video can be viewed in full here: https://www.youtube.com/watch?v=8YQaWIWbzhI&feature=youtu.be
Viceroy believes the practice of giving AMD discretion as to when, if and how it reports its own vulnerabilities facilitates poor corporate disclosure and keeps stakeholders in the dark. This is not how free financial markets operate for a reason and is validated by the SEC’s most recent statement relating to cybersecurity flaws: we would similarly not give fraudulent companies the discretion as to if and when they inform their investors they are a fraud.
This report expands on the financial impact of the CTS Labs vulnerabilities, specifically the impact of future earnings and possible legal liabilities that Viceroy believes will arise against the company. Viceroy have appointed lawyers to assess the reliability of the security claims made by AMD considering the basic level flaws that have been identified.
Viceroy analyze CTS Labs’ report exposing fatal security vulnerabilities across AMD products
CTS Labs, a cyber-security research firm, released its findings on http://www.amdflaws.com. These findings demonstrate that AMD’s key products, and it basis for profitability and growth, the EPYC and Ryzen processors, contain severe and pervasive security flaws that put users and organizations at an unacceptable and damaging risk. We understand that these flaws are difficult, some practically impossible, to patch.
We believe that AMD was compelled to release products as quickly and cheaply as possible as it was falling behind its competitors. This has led to what appears to be complete oversight or negligence of security fundamentals of AMD’s products, which promote an evidently misguided competitive advantage – particularly with its Secure Processor (a.k.a. Platform Security Processor or PSP) – of providing “the greatest peace of mind on every AMD product.”. Nothing could be further from the truth.
Viceroy, in consultation with experts, have evaluated CTS’s report. We believe the issues identified by CTS are fatal to AMD on a commercial level, and outright dangerous at an international level.
In light of CTS’s discoveries, the meteoric rise of AMD’s stock price now appears to be totally unjustified and entirely unsustainable. We believe AMD is worth $0.00 and will have no choice but to file for Chapter 11 (Bankruptcy) in order to effectively deal with the repercussions of recent discoveries.
Date: 13 Mar 2018
ProSieben’s (ETR:PSM) growth story is a lie: earnings manipulation, huge put liabilities.
ProSiebensat.1 Media SE (ProSieben) is a European media company focused in the German-speaking TV and digital market. The company’s core business is advertising-financed free TV, supplemented by digital segments built by a diversification campaign over the last half-decade.
Diversification has proven a costly and ultimately unsuccessful strategy. Viceroy believes ProSieben is a highly leveraged entity with non-performing subsidiaries offering no synergies. ProSieben’s core business – which has carried ProSieben’s investment losses – appears to be in accelerating decline, with a potential death knell spurred by the EU’s implementation of its General Data Protection Regulation (GDPR).
Viceroy believes that ProSieben will be forced to issue another capital raise or cancel its dividend to zero to deal with these problems.
ProSieben displays all the signs of a business in an advanced state of decay in every operating segment. Viceroy believes that these issues have gone unattended for too long, and a correction is imminent as ProSieben’s market becomes stressed.
We value ProSieben at EUR 7.51 per share, representing a 75% downside on the closing price at March 5, 2018.
*Edit – 6 Mar 2018 – Correction on Figure 1.
A perfect example of why Viceroy don’t “engage with management” – they don’t answer our questions.
Viceroy issued an open letter to Capitec’s board of directors on 20 February 2018, responding to their invitation to engage with management and field our questions.
A full copy of our letter can be found here:
Capitec replied to our letter on 22 February, 2018 via email, however provided no straightforward responses to any of our questions. At best, Viceroy received numerous largely insignificant statistics and tangential statements.
Capitec’s full response to our letter is attached to this report as Annexure 1.
Viceroy has been criticized for not engaging with management prior to publication of our reports. Capitec’s response is a prime example of why we choose not to. We maintain our recommendation that Capitec should be subject to an external, independent regulatory investigation, which we believe will result in Capitec being placed in curatorship in order to protect its consumers.
Viceroy present further evidence of MiMedx illegally selling on reimbursement, adding our already extensive evidence of pervasive fraud.
Viceroy has obtained documents detailing a legal dispute between MiMedx and Mad River Community Hospital (“Mad River”). The documents clearly outline MiMedx’s fraudulent sales methods including misrepresenting reimbursement rates for products and “marketing the spread”.
This report details the serious misconduct and underhanded sales tactics of MiMedx personnel in California, which executive management were certainly aware of given the ensuing litigation. As we have demonstrated over 20+ reports, these types of improprieties are commonplace throughout the organization. Never before have our legal advisers or consultants come across such gross and serious misconduct.
The Mad River documents also show MiMedx engaged in “selling on reimbursement”, contrary to a several laws and regulations and some alleged MiMedx policies.
The Mad River filings portray (we believe accurately) MiMedx as third-rate con-artists.
Contrary to Parker H. Petite’s rhetoric of “Good Business Acumen” and persistent denials of “marketing the spread”, this report will unlawful practices that MiMedx, including “marketing the spread”. This is the very tip of the iceberg that law enforcement and regulators have been made aware of.
It is Viceroy’s intention to continue the dialogue with MiMedx’s auditors and regulators to bring about the prosecution of Parker H. Petit.
In the wake of mounting evidence of fraud, illegal revenue recognition systems, retaliation against whistleblowers and concealing evidence from investors, we immediately call for Parker H. Petit’s resignation.
Capitec has opened an invitation to address Viceroy’s questions.
We believe our reports have clearly conveyed our concerns with Capitec, but have happily condensed our research into questions.
We look forward to Capitec’s response.
On January 30, 2018 Viceroy Research released our report on Capitec (JSE:CPI) citing a need for large impairments and regulatory intervention.
The issues expressed by Viceroy have been reflected in a letter from Benguela Global Fund Managers to Capitec also raising concerns about Capitec’s lending practices. This report presents the results of Viceroy’s further investigation into Capitec and a rebuttal of Capitec’s responses to Viceroy and Benguela.
Capitec’s behavior has led to material overstatement of the quality of the book and substantial under-provisioning. We note the South African Reserve Bank (SARB) described Capitec as being liquid and solvent on the basis “of the available information”. Evidence suggests the available information is being deliberately distorted by Capitec management and we believe that as a matter of prudential supervision the SARB must investigate the lending practices at Capitec. We are providing this data to SARB and the NCR.
Viceroy continues to believe that Capitec is fundamentally uninvestable and reiterate our recommendation that an investigation by an independent body is launched in the face of the evidence presented in our research.
Viceroy comments on information available to the South African Reserve Bank regarding Capitec:
In response to Viceroy’s recent report on Capitec (JSE:CPI), the South African Reserve Bank (SARB) decided to vouch for Capitec. Indeed, it decided to stake its reputation on the accuracy of the company’s accounts. Below is their statement in full:
“The South African Reserve Bank (SARB) notes a report by a US based fund manager. As part of our mandate, we monitor the safety and soundness of all banks, including Capitec Bank Limited (Capitec). According to all the information available, Capitec is solvent, well capitalised and has adequate liquidity. The bank meets all prudential requirements.”
The South African Reserve Bank has a responsibility to determine whether the information provided to them – and on which they base their regulatory decisions is accurate. We do not think it is.
The SARB has, at this point, a responsibility to perform a full regulatory inspection of Capitec. Viceroy remains firm in its belief that this will result in SARB placing Capitec into curatorship.
Viceroy will shortly respond to Capitec’s press release in relation to our report.
Based on our research and due diligence, we believe that Capitec is a loan shark with massively understated defaults masquerading as a community microfinance provider. We believe that the South African Reserve Bank & Minister of Finance should immediately place Capitec into curatorship.
Capitec Bank Holdings Limited (JSE: CPI) is a South Africa-focused microfinance provider to a majority low-income demographic, yet they out-earn all major commercial banks globally including competing high-risk lenders. We don’t buy this story. Viceroy believes this is indicative of predatory finance which we have corroborated with substantial on-the-ground discussions with Capitec ex-employees, former customers, and individuals familiar with the business.
Viceroy’s extensive due diligence and compiled evidence suggests that indicates Capitec must take significant impairments to its loans which will likely result in a net-liability position. We believe Capitec’s concealed problems largely resemble those seen at African Bank Investments (JSE: AXL) prior to its collapse in 2014.
We think that it’s only a matter of time before Capitec’s financials and business unravel, with macro headwinds creating an exponential risk of default and bankruptcy.
This report will provide underlying information and analysis we believe supports the following conclusions:
Given what we believe is a massive overstatement of financial assets and income, together with opaque reporting of loan cash flow and reckless lending practices, we believe Capitec is simply uninvestable and accordingly have not assigned a target price.
This post highlights the incriminating testimonies from MiMedx employees, associated entities and attorneys, which have subsequently been sealed by the company to conceal evidence from stakeholders.
The order to seal these documents came only after Viceroy’s highlighted that AvKare “didn’t do anything”, according to Mike Carlton (MiMedx VP of Global Sales), but only served to facilitate MiMedx’s channel stuffing & other suspicious activities. Parker H. Petit, knew investors would quickly realize he was misleading them – the information was incriminating MiMedx if left unsealed.
Parker H. Petit & MiMedx continuously attempt to sweep criminal actions and contradictory statements under the rug – in this instance, they sealed incriminating deposition transcripts. Fortunately, Viceroy had already obtained these records prior to the motion to seal bring filed with the court.
We are disclosing the documents in the public interest:
New insights on MiMedx instructions to physicians on how to fraudulently increase compensation.
Following the release of our previous report titled “Viceroy release MiMedx EOB emails”, Viceroy Research have been contacted by physicians corroborating MiMedx’s role in distributing EOB to fraudulently increase Medicare reimbursement. This occurs through the reclassification of AmnioFix products as EpiFix products in order to obtain Medicare reimbursements.
MiMedx’s recent nonsensical responses to our research have been evasive and does not acknowledge that at its core, the practice construes Medicare fraud. In order to demonstrate this, Viceroy set a Honeypot. MiMedx in their desperation to mislead investors, have taken our bait.
While the issue of reclassifying MiMedx product to exploit federal billing facilities was a major issue, there was another underlying element to the EOB.
Consider the following: in principle, Medicare reimbursements cover 80% of the cost of any treatment used as well as 80% of the Medicare application fee. Typically, this means a reduced payment for the patient, however by utilizing a larger graft than is necessary a physician can be reimbursed more than the cost of treatment.
Per the Rosenberger email, how can MiMedx justify physicians PROFITING from Medicare when system is intended to cover a PORTION of costs?
Viceroy yesterday showed MiMedx has zero credibility regarding their statements. Previously MiMedx had state to investors AvKare wasn’t an intermediary, controlled sales and it was all lies. MiMedx know full well what the implications of Mike Carlton’s deposition under oath means. There is no commentary, statements issued by MiMedx are purely intended to manipulate a situation where blind and naive analysts continue to promote the stock.
AvKare just “made it easier” for former Advanced BioHealing agents to stuff federal customers with MiMedx product
Viceroy present indisputable proof that Parker H. Petit has been misleading investors and defaming Marc Cohodes & Viceroy.
Mike Carlton, VP of Global Sales, was under oath giving a deposition about MiMedx’s relationship with Mid-South Biologics, who are suing MiMedx regarding contractual issues. Parker H. Petit and MiMedx attorneys would have known that during the deposition, Mike Carlton said this:
“AvKare didn’t sell the product. They didn’t do anything. They just made it easier to sell.”
Interestingly, when Viceroy and Marc Cohodes echoed this statement, we were met by a barrage of lies and a law suit from MiMedx who want to falsely asset our reports are factually inaccurate.
For the analysts that can find ‘no credible evidence of wrong-doing’, we recommend they review filings for all cases MiMedx are involved in.
Today’s focus is on case is Mid-South Biologics LLC (Pla) Vs. MiMedx Group Inc (Def) – Reference: Case 2:17-cv-02028-JTF-egb Document 43-3 Filed 12/04/17. The deposition was taken on the 13th Day of October 2017.
Parker H. Petit and Mike Carlton are advised that we have forwarded this information to the SEC. Investors should be aware of the lengths MiMedx will go to mislead and misinform its shareholders
As a recap:
Analysts who can blindly find no credible evidence of wrong-doing should seriously review Viceroy’s reports and MiMedx’s own documentation showing channel-stuffing, fake revenue recognition, ‘free evaluation products’, breaches to anti-kickback statutes and many more violations.
As previously reported, MiMedx is being investigated by Regulators, it would be prudent for the sellside to conduct their own investigation instead of relying on a “binary outcome” in relation to allegations of fraud.
Viceroy has obtained emails instructing physicians how to falsify MiMedx Q-codes to fraudulently increase reimbursement.
Viceroy have obtained printouts of emails sent from MiMedx employees specifically instructing physicians on how to fraudulently increase Medicare reimbursement.
An EOB document titled “EpiFix – Made Easy” has been sent to Viceroy, which appears to be advice from MiMedx to physicians on how to receive Medicare reimbursements for their product.
One problem: this advice was provided to surgical clients; whose products are ineligible for Medicare reimbursement.
Viceroy is pleased to release its research report on Steinhoff International Holdings NV.
Steinhoff (SNH) has long been under scrutiny for seemingly inexplicable factors including:
Viceroy’s investigation into Steinhoff has revealed several concerning activities surrounding a number of at least two off-balance sheet, undisclosed related party entities:
While the existence of some of these entities has been reported by the media, their activities have not. Viceroy’s analysis suggests Steinhoff uses these off-balance sheet vehicles to artificially inflate earnings:
Given these loss-making entities such as Southern View Finance UK, are being round tripped back to Steinhoff, Viceroy believe it is possible that Steinhoff are “repaying” Campion’s outlays through acquisition premiums (i.e. losses are being capitalized through round-trip transactions with related parties).
Viceroy believes that, based on the contents of this report, Steinhoff should consolidate Campion Capital and its subsidiaries given that Steinhoff bears full economic liability for these entities through loan arrangements and exert total control through overlapping management.
Viceroy believes the facts presented in this report will bring Steinhoff’s behavior to the attention of regulatory authorities.
Viceroy has received responses to two Freedom of Information Act (FOIA) requests lodged after the publication of our initial report, one from the Department of Veterans Affairs and the other to the Department of Justice.
PDF Download Link
Both agencies withheld all requested documents under 5 U.S. Code § 552 5(b)(7)(A), which provides an exemption for agencies to make available public documents as it could “reasonably be expected to interfere with enforcement proceedings.”
Viceroy now believe MiMedx is under formal investigation by the Department of Justice, the Department of Veterans Affairs and the Securities and Exchanges Commission.
Viceroy’s latest report reveals emails between the VA and MiMedx show MiMedx employees were instructed to circumvent VA policy regarding consignment agreements.
Viceroy obtained a series of emails between MiMedx employees and VA personnel. These emails are focused on the arrangement of consignment inventory, contrary to VA hospital regulations at the time. The issue comes to a head when a VA supervisor decides to hold MiMedx responsible for repeatedly sending product that was not ordered. The VA have been made aware of these and other emails with a report of concern.
MiMedx emails to former employees are in clear violation of federal law: settlements contingent on retracting statements to regulatory bodies.
Viceroy has obtained from a physician an email sent from MiMedx employees to physicians to fraudulently exploit the reimbursement system to financially benefit both the physician and MiMedx. This is done through manipulation of Q-codes which denote the form of treatment in which a product was used. The aim is for all treatments using MiMedx products to be coded as “wound care” in order to fraudulently maximize reimbursement. This type of Medicare fraud is referred to as ‘up-coding’.
In addition to this Viceroy present recent court filings and emails showing that MiMedx engaged in illegal settlement terms in its legal actions against former employees. MiMedx has sent legal material to former employees requesting that they do not contact regulatory authorities and has stipulated in its settlement agreements that former employees retract their statements to any regulatory body. This is a violation of the United States Code of Federal Regulations.
As a reminder of MiMedx selective statements to its investors, it’s by no coincidence that MiMedx are now blatantly cloaking their conduct in public courts relating to former employee proceedings on confidentiality grounds.
Viceroy continue to be contacted by physicians, former employees, former and current VA employees all speaking on a similar theme when explaining MiMedx conduct. We thank these brave individuals for fighting back against the unnecessary, aggressive, and retaliatory actions of MiMedx.
Viceroy were informed by various physicians that they had reported their concerns to the Office of Inspector General U.S. Department of Health & Human Services .
We are also led to believe that MiMedx’s statement of assisting the Department of Veterans Affairs with its on-going investigation is incomplete, if not deceptive, via omission. Viceroy believe investors should have been told of these investigations and what information was requested by VA investigators.
The more MiMedx management continue to lie to its investors through press releases and responses to short seller articles, the more disillusioned and harassed former employees send Viceroy evidence countering their claims.
Viceroy have discovered legal proceedings against MiMedx vendor RedMed for their alleged role in a kickback scheme and False Claims act violations. In addition to this Redmed’s principal Jeff Hannes is also involved with several other Physician Owned/related Distributors (PODs).
Viceroy will also highlight MiMedx sales to another POD whose physician is no longer alive and the LLC deregistered.
Viceroy will release details of further PODs shortly.
Pete Petit would like us to examine his track record of running public companies. We find that Pete and his close-knit board & management has a tendency to run them into the ground.
Part 13 – The same thing happened at Matria
This report concerns MiMedx directors Parker “Pete” H Petit, Debbie Dean and Joseph “Joe” G. Bleser and their previous positions at other Petit companies; Healthdyne Inc., Healthdyne Information Enterprises (HIE), Healthdyne Maternity Management (HMM) and Matria Healthcare.
The events detailed in this report resulted in a catastrophic collapse of Matria’s share price due to earnings downgrades and revision of future performance.
MiMedx employee Ricky Palmer worked as distributor for MiMedx customer, selling to the Department of Veterans Affairs and the Department of the Army.
This report concerns MiMedx employee Ricky Palmer and his position at a MiMedx distributor Southwest Medical Systems Inc while simultaneously being employed at MiMedx.
Viceroy also addresses major discrepancies in MiMedx’s latest “commentary” piece. Specifically, MiMedx claim its “sales agents” do not “distribute” MiMedx supplies:
This statement directly contradicts FDA records suggesting many agents in MiMedx’s 2016 sales report both store and distribute inventory.
Viceroy releases MiMedx sales records that directly contradict company statements. MiMedx, which department will Viceroy expose next?
MiMedx has increasingly come under pressure from both analysts and short sellers over the past month. The market is waking up to find MiMedx’s closet of skeletons quickly spilling open. Dubious hiring practices, physician owned distributors, employee owned distributors and poor corporate governance are all coming into focus. The specter of action by the United States Department of Justice, Office of the inspector General of Veteran’s Affairs and the Securities and Exchanges Commission now hangs over the company.
Viceroy has obtained documents from former MiMedx employees detailing sales targets and historical figures broken down by distributor. The information directly contradicts statements made by MiMedx. Viceroy believes that MiMedx has systematically and deliberately misled investors and stakeholders and has forwarded this information to the relevant authorities.
This report is concerned with the creation of Physician Owned/Related Distributors (henceforth PODs). The potential for fraud is well documented as evidenced by the release of the special fraud alert by the Office of the Inspector General of the Department of Health and Human Services:
We previously highlighted the activities Donovan Schmidt, MiMedx Market Development Manager available here:
We now evidence MiMedx employee Donovan Schmidt’s active involvement in the premediated formation of a physician owned/related distributor (POD) with a prominent Atlanta physician.
“There is a MiMedx employee his name is Donovan Schmidt, he is an employee and also a distributor and also worked for Orthofix.” – Former MiMedx Employee
Viceroy is releasing more on illegal Physician-Owned Distributors (PODs) operating in the wound care space within the state of Texas. Our spreadsheet will follow shortly to expose multi-state PODS and conflicted operations.
Given the large proportion of income derived from Texas sales, investors should be concerned, especially as the numerous, undeniable, illegal PODs we illustrated on our report dated October 13, 2017 have not been addressed by management.
MiMedx’s blanket denial of Viceroy’s report and aversion to conducting an investigation suggest that management are either fully aware of these illegal distributors, or have been negligent in their duties…
MiMedx is not operating in an industry where these abuses are commonplace, and yet within the single state of Texas, we have connected MiMedx with:
Malfeasance by PODs and kickbacks are an abuse of the healthcare system. The abuse not only costs patients and insurers but ultimately undermines the integrity of physicians where products are prescribed to enrich suppliers (namely MiMedx) and kickbacks to physicians in return.
This report further details connections between MiMedx and its network of PODs. This network of distributorships owned by employees and physicians allows MiMedx to engaged in large scale channel stuffing activities.
Lou Roselli made the headlines once more last week as an incriminating email surfaced where Lou admits MiMedx cannot reconcile inventory to federal customers. In the tissues business, this is strictly against the law.
Given the substantive evidence presented in our reports, we call on the board of MiMedx launch an immediate external investigation into the conduct of senior personnel, and subsequently resign.
The structure of these distributors leaves open great opportunities to exploit the US healthcare system. As a reminder to our readers, the Office of the Inspector General of the Department of Health and Human Services issued a special fraud warning stating that such ventures “should be closely scrutinized under the fraud and abuse laws.”
This report focuses on commercial relationships with currently indicted individuals for fraud with direct trading links with MiMedx and Physician Owned Distributors (PODs) in Texas with more to come.
In this report, we detail exactly what MiMedx management withheld about its relationship with CPM Medical & unquestionably evidence PODs that have sold & are selling MiMedx products, with full references & FDA evidence. MiMedx’s channel stuffing distributor, CPM Medical, defaulted on its credit terms due to a DOJ/FBI crackdown on a key client, Forest Park Medical Center – a convicted US$40M fraudulent kickback scheme.
Viceroy also present indisputable FDA evidence that MiMedx was specifically trading with physician’s spouses – via physician-owned/related distributors registered to store MiMedx products ONLY.
Viceroy has previously published on MiMedx detailing its dubious hiring practices, connections to related party employee-owned distributors, improper government filings and undisclosed SEC investigation. Since publication many former MiMedx employees that are not in legal conflict with MiMedx have reached out to Viceroy to provide information and corroboration of our investigations.
Information Viceroy has received from a further Whistleblower expands and gives details into the channel stuffing practices at MiMedx, including the structure of the employee and physician owned distributors and mechanisms of sales enticements.
Prior to Viceroy’s publications, we filed a significant data bundle of evidence to the SEC Whistleblower program. We always believe where appropriate in notifying regulators first. We under some may not wish to disclose or communicate with Viceroy, however can contact the SEC directly: https://www.sec.gov/whistleblower.
Viceroy has previously published on MiMedx detailing its dubious hiring practices, connections to related party employee owned distributors, improper government filings and undisclosed SEC investigation.
Many former MiMedx employees that are not in legal conflict with MiMedx have reached out to Viceroy to provide information and corroboration of our investigations.
In this report, we detail:
Allegations as they stand are so substantial that Viceroy are now engaging in dialogue with the Department of Justice.
“I don’t know how they’re hitting their numbers: that’s what’s blowing me away. What is going on? How are they supposedly hitting these numbers? I want to know.” – Former MiMedx Employee
Viceroy continues piecing together further damning evidence of MiMedx’s dwindling relationship with the Department of Veterans Affairs.
As a recap, we have established flawed and dubious hiring practices for MiMedx, connections to related-party employee-owned distributors, improper government filings, photographic evidence of channel stuffing and an undisclosed SEC investigation.
MiMedx refuse to acknowledge the facts. In what appears to be a blatant disregard for the SEC rules and the need for 8-K filing, MiMedx recently filed an 8-K for relating to a “Amendment to Credit Agreement”, ignoring the elephant in the room: the SEC subpoena. According to MiMedx actions, an amendment to credit agreement” is significantly more important than the need to file an 8-K relating to an SEC subpoena. Viceroy believe that this is to avoid people tracking the issues of MiMedx and/or owning up to the seriousness of an on-going investigation.
This is in addition to MiMedx misleading its investors about the publication of an alleged independent report that was concealed from its own investors. As highlighted by Aurelius Value, MiMedx went one step further and prohibited its disclosure even when the SEC made inquiries. Investors would be prudent to check the SEC filings from April 18, 2017
While Viceroy pieces together further damning evidence of MiMedx’s dwindling relationship with the Department of Veteran Affairs, investors should question the discretionary nature of MiMedx’s aggressive litigation. Namely against employees which have breached their non-compete with the company. Viceroy has previously published on MiMedx detailing its dubious hiring practices, connections to related party employee owned distributors, improper government filings and undisclosed SEC investigation.
Many former MiMedx employees that are not in legal conflict with MiMedx have reached out to Viceroy to provide information and corroboration of our investigations. All whistleblowers are extremely fearful of physical and legal retribution from MiMedx. They have provided images, statements, corroborating phone data/records and further information about the company’s channel stuffing practices, executive impropriety and lack of disclosure.
Contrary to their statements, we believe MiMedx intentionally turns a blind eye to certain employees setting up their own distributorships especially where it is likely to benefit MiMedx revenue schemes. This has been confirmed by former employees who told Viceroy:
“…some people are allowed to break a rule [that] others are not. And there’s so much stuff that goes on behind the scenes with the executive team that no one knows who makes the rules…” – Former MiMedx Employee.
Viceroy has previously published on MiMedx detailing its dubious hiring practices, connections to related party employee owned distributors, improper government filings and undisclosed SEC investigation.
Following publication of our first report, MiMedx held an investor conference call on September 21st where management knowingly made false statements to their investors and the general public. MiMedx published a rebuttal to Viceroy’s second report, which is posted to the front page of the MiMedx website, linked to a Box account, and not on company letterhead.
We believe this represents a misaligned focus between the organization’s strategy in crisis control and Pete Petit’s systematic attempts to clear his name and slander Viceroy’s investigations.
Many former MiMedx employees that are not in legal conflict with MiMedx have reached out to Viceroy to provide information and corroboration of our investigations. All whistleblowers are extremely fearful of physical and legal retribution from MiMedx. They have provided us with images, statements and further information about the company’s channel stuffing practices, executive impropriety and lack of disclosure.
MiMedx cherry-picked a handful of bulls for the September 21 call last week, restricting access for their own investors and others with an interest in the events that transpired on the week ending September 22, 2017. During the call, analysts asked pertinent questions that remain substantially unanswered. To assist investors, we’ve compiled a list of items that were conveniently ignored, avoided or even blatantly misrepresented.
Over the last week, MiMedx has:
Viceroy Research uncovered substantial previously-unreported data evidencing an incestuous hiring policy from a kickback & bribery scheme, a possible SEC enforcement investigation, and indications of channel stuffing.