Health Care Software Provider COO Faces Fed Fraud Charges
Financial, a health care software company, is on the hot seat for
misleading and defrauding investors and auditors on its financial
health. Canopy's COO, Jeremy Blackburn, is facing both criminal and
civil charges and faces a potential 20-year prison sentence and civil
fines of $250,000 and mandatory restitution.
Department alleges Blackburn submitted a bogus audit report that
resulted in $60 million private equity investment from Spectrum Equity
Investors in July this year. Blackburn, 36, then used $2 million of
that investment money for his own personal use, and used a false bank
statement to obtain a mortgage on a new home. Blackburn has also been
charged with submitting a bogus KPMG audit report to investors,
something the accounting and audit firm claims it did not supply
Canopy, according to a Justice Department statement.
Blackburn also allegedly transferred money from investments received into his own bank account, according to the DoJ statement:
"After Canopy received Spectrum's fraudulently obtained investment, Blackburn allegedly obtained unauthorized transfers from Canopy's financial accounts of more than $1 million to a credit card company account, a corporate jet leasing company, and a luxury automobile dealership, the charges allege. In addition, approximately $1.17 million was transferred from Canopy into two of Blackburn's personal bank accounts, allegedly without corporate authorization."
Financial's product line focused on online health care transactions in
areas like flexible health care spending accounts and included software
for expense tracking, account management, payment processing and online
bill payment. Blackburn allegedly used false bank statements to help
bilk investors into thinking the company had a whole lot more money
than it did.
From the Justice Department statement:
"In addition to the phony audit report, Blackburn and Individual B allegedly provided Spectrum with falsified bank statements for the months of January through June 2009 in response to a request by Spectrum. The statements, which purported to represent a Canopy account at Northern Trust Bank, showed balances from January through June ranging between $5.7 million and nearly $9 million. In fact, the charges allege, no such Canopy account existed and the only Canopy account at Northern Trust, which was held for the benefit of one of Canopy's Health Savings Account clients, had a balance at the end of June 2009 of just under $87,000."
Blackburn, who resided in Malibu, Calif., was released on $1 million bond after appearing in a Chicago Federal court. He faces criminal charges for the Department of Justice and civil charges from the Securities and Exchange Commission.