Biovail founder, execs accused of accounting fraud

Ottawa Senators owner Eugene Melnyk and three current and former officers of Biovail Corp. were accused yesterday by regulators in Canada and the United States of filing inaccurate financial statements and providing misleading information to investors.



The company itself, Canada’s largest publicly traded drug maker, faced similar accusations but announced yesterday that it reached a $10 million US settlement with the U.S. Securities and Exchange Commission over the charges, which date back to the 2001-2004 period.



"We allege that Biovail and senior executives engaged in a pattern of systemic, chronic fraud that impacted its public filings of quarterly and annual reports over the course of four years," said Mark Schonfeld, director of the SEC’s New York office in a statement announcing the settlement.

Named in the SEC and Ontario Security Commission allegations are Biovail founder Melnyk, who stepped down as CEO last year, former chief financial officer Brian Crombie, and current controller John Miszuk and CFO Kenneth Howling.

The SEC said the settlement doesn’t resolve allegations made against the four men.

Melnyk said in a statement yesterday that he intends to "vigorously contest the absolutely false allegations of the SEC and OSC, and am confident that I will prevail once all the facts are heard."

"I am disappointed by the proceedings. ... The vast majority of the allegations made by the SEC and OSC do not pertain to me," said Melnyk, the company’s biggest shareholder with more than 11 per cent of the stock.

The first appearance for Melnyk and the others on the OSC allegations is scheduled for April 22.

Biovail is currently embroiled in a feud with Melnyk, who has accused executives of incompetence.

This is not the first clash Melnyk has had with regulators. Last year he paid $1 million Cdn to settle allegations he misled the OSC over the trading of Biovail shares.