Former CEO Receives Probation for Lying to Feds

John Schulte is one lucky man.

The former president and CEO of Colorado Springs, Colo.-based Spectranetics Corporation fortuitously avoided a jail term and a hefty fine for lying to federal prosecutors about unapproved medical device imports. The Boston, Mass., resident currently is serving 12 months of probation without reporting requirements or home confinement, according to his attorney, Thomas L. Kirsch of Chicago, Ill.

In addition to his probation, Schulte received a $5,000 fine (which he quickly paid at his May 29 sentencing) and is required to perform 100 hours of community service. Kirsch believes the punishment is appropriate, considering Schulte was acquitted of most charges against him and has led an “exemplary life.” Dozens of Schulte’s co-workers submitted letters to U.S. District Court Judge Wiley Daniel in Denver, Colo., in Schulte’s behalf requesting leniency.

“I clearly think a sentence greater than that (one year of probation) would not have been warranted under the circumstances,” Kirsch told The Colorado Springs Gazette.

Prosecutors disagreed. The U.S. Attorney’s Office had recommended that Schulte be jailed for two years and given three years of probation for deceiving the federal government. He faced a maximum three-year prison term and $250,000 in fines.

“While the government argued that a two-year prison sentence would be appropriate given the nature of the crime, we respect the decision of the court, which has the ultimate authority to impose sentence,” U.S. Attorney’s Office spokesman Jeff Dorschner told the Gazette.

A federal jury in March convicted Schulte of lying to investigators but acquitted him of 11 other charges, including conspiring to defraud the federal government and smuggling unapproved medical devices into the United States. A 2010 federal grand jury indictment accused Schulte of concealing the devices from the U.S. Food and Drug Administration (FDA), the U.S. Department of Homeland Security, and from internal investigators at Spectranetics, where he resigned in 2008. The indictment stemmed from a joint investigation by the U.S. Attorney’s Office, the FDA’s Office of Criminal Investigations and the U.S. Customs and Border Protection.

Good fortune also smiled upon Trung Pham, a former business development manager for Spectranetics and an alleged co-conspirator in the device smuggling ring—a jury acquitted him of all five charges in the same trial that resulted in Schulte’s conviction. Federal prosecutors later dropped all charges against Obinna Adighije, the company’s former vice president of business development who now lives in San Diego, Calif.

No sentencing date has yet been set for Hernan Ricuarte, a representative for BAC, a Florida company hired by Spectranetics to identify the manufacturers of parts for its catheters and medical lasers. Ricuarte pleaded guilty in August 2011 to a single count of concealing a felony by sending an e-mail to a Spectranetics employee acknowledging and promoting the use of false invoices for the Japanese guidewires. As part of a plea agreement, prosecutors have promised to seek probation for him.

Spectranetics paid $5 million in penalties and forfeitures to avoid prosecution as a company and settle all allegations in the indictment.

Spectranetics develops, manufactures, markets and distributes single-use medical devices used in minimally invasive procedures within the cardiovascular system. The Company’s products are sold in more than 40 countries and are used to treat arterial blockages in the heart and legs, as well as the removal of pacemaker and defibrillator leads.