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Illustration: Edel Rodriguez

The Pity of Wirecard, Part Two: Bezzle Never Sleeps

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If questions about the integrity of Wirecard AG’s accounting in its crucial Asian operations are ever to be resolved, Singapore regulators will need to step back and take a long, hard look at James Henry O’Sullivan’s relationship to the Aschheim, Germany–based company. Prosecutors at Singapore’s Consumer Affairs Department have been investigating Wirecard’s fast-growing Asian division, claiming in a March 8 filing that employees in its Singapore office orchestrated a complex, multiyear scheme to inflate the company’s revenue. Specifically, the regulators would want to examine O’Sullivan’s complicated role in Wirecard’s suspect October 2015 purchase of Great India Retail’s online payment businesses, which the Southern Investigative Reporting Foundation reported on in January 2018. Forty-six-year-old O’Sullivan, a native of England but said to be currently living in Singapore, seems to keep a low profile; his name rarely shows up in legal documents or on the internet, except in filings for a series of Isle of Man–based shell companies and a Luxembourg holding company, Caireen SARL. But sift through enough of this paperwork and a very distinctive picture of O’Sullivan emerges — that of a digital payments industry veteran with a cleverly hidden hand in nearly everything Wirecard does in Asia.

The Pity of Wirecard, Part One: Oliver’s Army

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Singapore — Few companies can explain their meteoric growth as alluringly as Wirecard AG. In one preferred narrative, Wirecard presents as Europe’s leading financial technology innovator, a globe-spanning developer of white label code and applications that remove the friction from electronic payments for both merchants and consumers. And in another, it’s a nimble bank, steadily generating low-risk revenues through the sale of integrated banking and credit-card processing services to businesses, and prepaid credit-cards to consumers. Understandably, investors found the prospect of owning shares in a company that is simultaneously driving a technological shift in consumer behavior while growing profits irresistible. Last September, Wirecard entered the German corporate establishment when it displaced Commerzbank for inclusion alongside the likes of BMW and Bayer in the blue chip DAX index, a closely followed roster of 30 of Germany’s biggest companies.

Wirecard AG: Something is Terribly Wrong Here

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After the Financial Times published a pair of whistleblower-driven exposes that suggested some of Wirecard’s parabolic growth in the Asia-Pacific region was the result of a purported multi-year revenue inflation scheme, anyone wanting to understand the kettle the German payments company finds itself boiling in would do well to observe the timeless journalistic maxim: “Follow the money.” But where to start? India is a good first step. According to a March 11 court filing made by Singaporean prosecutors — Singapore is both the headquarters for Wirecard’s Asia-Pacific region and where the FT reported the alleged scheme was launched — three so-called transactional parties, two of which are Wirecard subsidiaries, are located there. The prosecutor’s filing is a response to Wirecard’s motion in the High Court seeking to limit the scope of the Singapore Police’s Commercial Affairs Department unit investigation and to secure the return of computers and files taken in raids on February 8, February 20 and March 5.

Corcept Therapeutics: The Company That Perfectly Explains the Health Care Crisis

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If someone wanted to use a Venn diagram to illustrate what is wrong with the U.S. health care system, picking the different sets would be easy: Price gouging, abuse of loopholes, hidden risks to patients, baffling regulatory decisions, marginal efficacies and the use of doctor payments to stimulate drug sales would be some logical choices. And a case in point would be Corcept Therapeutics, a specialty pharmaceutical company based in Menlo Park, California, and the apparent union of all things expensive and opaque. So how did Corcept, a small company with just one drug aimed at treating a tiny population of patients with a rare pituitary disorder, wind up there? Corcept has managed to make handsome profits by quietly yet efficiently exploiting gaps in the nation’s health care regulatory framework. And its sole drug is none other than the storied mifepristone, better known as the abortion pill.

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Myriad Genetics: This Company Has Great Difficulties Telling the Truth

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 In early May several hundred investors, doctors and brokerage research analysts attended a dinner presentation after cocktails offered by the leadership of Myriad Genetics in Manhattan’s midtown. Salt Lake City–based Myriad, best known for its hereditary cancer tests, was in New York to tout new research on its increasingly popular GeneSight product during the American Psychiatric Association’s annual conference. The APA conference is an important event for Wall Street as well as pharmaceutical companies because of the massive amount of money Americans spend each year on drugs and therapy for treating depression. A March 2017 American Psychological Association article estimated the annual cost of treating depressive disorders at $71 billion and rising; in May Myriad said the total cost of major depressive disorder was $100 billion a year. Thus, taking notice of the latest drug development news could potentially be very lucrative for companies and investors alike.

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Myriad Genetics: It’s Good to Have a Pal in the Senate

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To understand what Myriad is today, it’s important to understand what happened on June 13, 2013. The day began with Myriad having a patent-protected monopoly — its 2013 income statement is a testimony to the benefits of having no rivals — and a fearsome reputation for ruthlessly enforcing its patents. Myriad had been awarded patents in 1994 and 1995 for two genes associated with a risk for breast cancer. But by 2009 the American Civil Liberties Union and the Public Patent Foundation legally challenged this, claiming genes are naturally occurring and thus not subject to patenting and that breast cancer research was being curtailed because of Myriad’s patents. (ACLU lawyer Tania Simoncelli subsequently discussed the suit in a November 2014 TED talk.)

Late that June 2013 afternoon, the Supreme Court ruled 9-0 in the plaintiffs’ favor, with Justice Clarence Thomas writing that the act of “separating [a] gene from its surrounding genetic material is not an act of invention.” He bluntly added, “Myriad did not create anything.”

By the time Myriad’s executives arrived home that evening, the company’s entire business model had been upended, with three companies announcing their entrance into the hereditary breast cancer screening business; more followed.

Teladoc Health: A CFO’s “Other Life” Worked Out Nicely (The Ex-Girlfriend & Her Boss? Not So Much)

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Work life balance, an ever elusive goal for many American corporate executives, has been given a fresh new meaning at fast-growing Teladoc Health, a provider of on-demand medical videoconferencing. But don’t expect to hear about generous paternity leave or a slick new gym at headquarters; this is one benefit that Teladoc Health definitely isn’t advertising. In a nutshell, for a little over two years Teladoc Health’s chief financial officer Mark Hirschhorn, 54, was in an affair with Charece Griffin, now 30, and an employee many levels below him on the company’s organizational chart. At the end of it, the powerful, high-profile executive stayed with nearly nary a consequence, while his girlfriend — and her boss — hit the road. ———-
Let’s start with this relationship’s unique optics, which appear designed to give a corporate lawyer a heart attack: While Griffin was not initially a direct subordinate of Hirschhorn, when he was given the additional title of chief operating officer in September 2016, that distinction was all but erased.

Newton Glassman and Other People’s Money

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Things are not going well for Newton Glassman. Southern Investigative Reporting Foundation readers will recall Glassman was the subject of a lengthy exposé in April, detailing the many ways his direction of Catalyst Capital Group Inc., a Toronto-based private equity fund with $4.3 billion in capital commitments, and its sister company, Callidus Capital Corp., should alarm both investors and regulators. Specifically, the reporting illuminated the risk Catalyst’s limited partners face because of the fund’s continually growing exposure to Callidus — a lender to distressed companies the fund bought in 2007 and took public in 2014 — whose performance has been disastrous. If that wasn’t bad enough, Glassman directed the fund’s plunge into a series of costly and reputation-threatening lawsuits against a host of purported enemies. On both fronts, incredibly, things have gotten worse.

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Illustration: Edel Rodriguez

Acadia Pharmaceuticals: This Is Not a Pharmaceuticals Company

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Frequently sporting a $2 billion plus market capitalization, Acadia Pharmaceuticals brings to mind the work of Belgian surrealist Rene Magritte. His 1929 painting “The Treachery of Images” depicts a pipe with the inscription “This is not a pipe,” suggesting that an image and its meaning don’t necessarily correspond with each other. In that vein, San-Diego-based Acadia portrays itself as a pharmaceutical company but a Southern Investigative Reporting Foundation investigation has revealed that this is merely a clever facade. What lies below is a ruthless marketing entity whose pursuit of regulatory approval is best described as “loophole-centric.”

Nonetheless, in little more than two years, Acadia has gained a remarkable foothold in the pharmaceutical marketplace. The company generated $124.9 million in sales last year — a steep increase from its $17.3 million in 2016 — and its management has told brokerage research analysts to expect its revenue to more than double this year.

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Newton Glassman’s Legacy of Ashes

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It was corporate skulduggery at its most audacious. Last September Frank Newbould dined at Scaramouche, a swanky downtown Toronto restaurant, with a businessman who said he would like to hire Newbould as an arbitrator. In reality, this was a ruse to engineer an attempted sting on Newbould, a retired Ontario judge, as the National Post reported. Newbould’s would-be client worked for Black Cube, a Tel Aviv-based business intelligence firm, staffed with former Israeli intelligence agents, that has attracted notoriety for its work for disgraced Hollywood producer Harvey Weinstein, among others. As Newbould and the man conversed, another Black Cube operative was secretly photographing them.