Marc Cohodes Last Stand – Part Four: Demanding an Investigation
Featuring Marc Cohodes
Published on: July 4th, 2019 • Duration: 23 minutesThis is the fourth part of the groundbreaking January 2019 interview between Real Vision co-founder Grant Williams and legendary short seller Marc Cohodes. In this clip, Cohodes continues the story of his battle to expose the truth about biotech giant MiMedx. Cohodes reveals what he believes to be the twelve categories of MiMedx’s improprieties. This clip is excerpted from a video published on Real Vision on February 1, 2019 entitled “Fraud, Intimidation and Truth: Marc Cohodes’ Last Stand.”
GRANT WILLIAMS: Let's get into this, the nature of it. Because you called this the biggest fraud you've ever seen. And you've shared with me some of this stuff over the last year as you've gone through it. And every time you share this stuff with me, my mind is boggled. I just can't believe the scope of this thing. But let's talk about some of the instances of fraud that you've uncovered and explain how they work. So a lot of people hear phrases like channel stuffing. I want them to understand what that is, round tripping. So let's let people or help people understand just the sheer scope of this thing.
MARC COHODES: I think that's a good idea. I talked about the binders that I put together. I think maybe if I read the letter to the auditor, it will give people and you the pattern if you want to dig into it. I said, dear Mr. Brock, please see enclosed primary source documents, court documents, and analysis on what I believed to be 12 categories of serious wrongdoing at MiMedx. Each category is bound separately. Some categories are too large for one binding, and are therefore, bound across multiple separate volume.
The additional volumes in these categories have the same title as the first volume in the category, followed by the word continued. Because I believe I've identified 12 distinct categories of egregious wrongdoing. I have dubbed MiMedx an around the clock fraud. Each category for an hour. Please see the following page for a table of contents. Thank you and please contact me. If you wish to discuss further, you can reach me at blank, at PO boxes above. Best regards, Marc Cohodes.
Around the clock fraud at MiMedx. The table of contents. One, Medicare fraud, healing reviews, pay when paid. Miscoding, et cetera. Two, endangering patient safety. Tissue mistagging, adverse events cover up, FDA amnio fix injectable letters cover up, et cetera. Three, undisclosed federal criminal investigations and evidence destruction. Four, bullying, threats, extortion, threatening sell side analysts to drop coverage, perjury. Five, abuse of process.
Six, old boys club, rape, sexual harassment racial diversity, et cetera. Seven, influence peddling. Eight, securities frauds, lies to investors, and to the SEC. Nine, accounting fraud, improper revenue recognition, channel stuffing, SG&A fraud, et cetera. 10, kickbacks bribery and improper inducement, especially of physicians. 11, stock fraud. Paying bills and receivables with company stock. A strong man buy back. A platter in cash from operations, et cetera. 12, criminal organization, targeting and promoting known criminals.
GRANT WILLIAMS: That's some list. That's some list. If we go into depth at all of those things, we'll be here for weeks. And I'm sure there are plenty of people watching this who wish we would. But let's pick a couple of the major ones, the ones that are the thickest binders, perhaps. Because those binders- that's a hell of a lot of work. That's two years essentially, of hard work. And I wanted people to see this, to understand that this isn't pick a stock, make the accusations, wait for the stock to drop, and cover it, right? This is, as you've said, this is 3:00 in the morning until 10:00 at night, 365 days a year. So let's get into a couple of the ones that you think are the most important. MARC COHODES: Well, and the crazy thing is- and it's important to note that Aurelius- and not my dog- Aurelius Value, who is all over MiMedx, he exposed a lot of it. Viceroy, who's Fraser Perring, he's exposed a lot of it. Joe Munda, who was silenced at First Analysis, he exposed a lot of it. And I exposed a lot of it and have a lot of it. The crazy part is life would be a whole lot easier if there was a wolf pack, or there was a cabal, where everything would have been orchestrated. But I can assure you, there never was. It would have been so much easier if there was a group or a gang, or this and the other, because this thing is so complex, and so wide-ranging, and so end to end.
I don't know a lot of those guys' sources, and they don't know my sources. And everyone has different people. But what I can tell you on the accounting and business side, very simple with channel stuffing is you make a shipment and book something as revenue and full profit without there really being an order or a demand for the product. I had a doc call me up out of Vegas after following me on Twitter and hearing a Periscope, and he says, you have no idea what goes on, just in Vegas, which is dirty. And he introduced me to a hospital administrator, other doctors, and sent me fake MiMedx invoices, a product that was shipped but never ordered in Vegas, that was picked up and signed for through FedEx reps by MiMedx salespeople or distributors which MiMedx claim they didn't have.
So in other words, you're Dr. Williams- the funny thing, this guy's name- one of the doctors was Williams- you never ordered the product. Never, not once. It gets shipped to you. It gets intercepted by me, a rep, who signs for it. You immediately get billed for it half a million bucks. The rep or agent gets a 30% commission on that. And there you have it, you have product that you never ordered. He then complains to someone higher up, I never ordered this product, take it back. This, that, or the other. The quarter has now ended. It's booked as sales.
And you rigmarole, and email chain back and forth for them to try to undo this. It's truly awe inspiring. And it went from him to another rep, and resold, and I think it made its way into Korea, where it shouldn't have gone. And MiMedx actually had someone rejigger their internal return software so it would never show up as a return and just be resold again. It's insane. So they were booking on many, many, many occasions. Probably every quarter.
GRANT WILLIAMS: Now, is this all happening around quarter end that you'd make the numbers up?
MARC COHODES: Always at quarter end. It was always at quarter end. Whether it's into the VA, VA intermediaries, docs, made up organizations, Saudi Arabia- last night, we had someone on the phone who was- past tense- very high up at MiMedx to tell what went on on a Christmas Eve on a shipment into Saudi Arabia, which was never, never ordered, and never used. And returned, and never credited back in returns.
It was significant amount of money. I think it was $4 to $5 million at quarter end. And everything was run for Pete to make or beat quarterly numbers. He used to brag in every letter and every correspondence to shareholders that they've met or exceeded 26 out of the last 27 quarters. What great company could possibly ever do this? Many people question is it even made up, these results are so spectacular. And as it turns out, it's all made up, it's 100% made up.
And distributors, sub-distributors, agents, people who were created to book revenue that was completely fake, happened quarter to quarter and on an exponential basis. And I detailed to the parties that be, and relevant parties where this is, who it came from. Documented it in the whole thing, and that's part of the tangle. So while MiMedx would claim they did $400 million annually in sales, I think when all the votes are cast, and they're still monkeying around to this day, even with the new management, they're still playing different games, but the same kind of games to make numbers up. Maybe $100 million is real, not even?
And it's incredible. It's so incredible that Ernst & Young not only walked. They walked and said there's no internal controls to even verify any number going all the way back to 2012. And I think part of that is, which is another one of those subcategories, is I'm led to believe from numerous people that servers and information was destroyed. That when these guys began to get investigated, stuff was destroyed. Evidence was destroyed and taken off servers.
You would say, how do you say this, or how do you know these things? Well, at the annual sales meeting a year ago, I think it was the end of January, Parker got on stage and went off on me, some former employees, Fraser Perring, and others about this burning desire to bad mouth and whatever the company, whatever his fiction was. And they actually handed out thumb drives to people that had very sensitive information that used to be on servers or on the hard drive.
Sensitive information like Isakson's campaign asking for money, and emails with Debbie Dean, who's Pete's off camera love interest. And she's still there, running trap for him, and giving him trade secrets back, even though he's been fired. And someone asked, why are you handing out these thumb drives? And someone responded that all the information was taken off the main servers. And they're so stupid at MiMedx, and they're so greedy, and they think they're so invincible that people can't figure it out or won't figure it out.
Or how you're on the phone with this person yesterday, how universally hated Pete is and was for what they did to people, and how they treated people. That it wasn't as much, and it's not as much helping me. It's more bringing Pete to justice and exposing him for all the things that he's done to people. And he has his inner circle. And he's operated and always operates that he's above the rule, law, and he can do anything because he has his paid political people like Isakson and then Tom Price. And he has his mafia-esque lawyer, Wargo French, who can just bully people into submission.
So whether it's channel stuffing, whether it's kickbacks, paying clinicians, destroying records, saying fuck you to the FDA, which they do, and they do to this day, he gets away with things that the average person wouldn't because he thought and/or thinks that he has it all covered through his political operatives. And it's truly remarkable. So he'd buy companies and create companies just to sell them product to never be returned. He'd give distributor stock- common stock just for taking product that shouldn't be taking product. He'd create sub-distributors and agents to compete against his own people. He'd create PODs, physician owned distributors, in various states to stuff doctors, to use the products, to give them stock. It's everything.
GRANT WILLIAMS: And you've got proof of all of it. Documented proof of all of it.
MARC COHODES: I have documented proof of all of it, and the egregious, egregious, egregious over the top stuff. I continue. I have no auditor to send it to anymore, because Ernst & Young has quit it. You ask yourself, how can the stock even be allowed to trade if the CEO and COO have been fired for cause, but the company won't disclose what the cause is? Not only can the numbers not be relied upon, the auditors said they don't even have controls or any systems in place for them to even find a baseline to even come up with a number. And yet, this thing to this day still trades at roughly a $300 million cap.
And that's it if you even believe the shares outstanding. And I think there's far more shares out than anyone even knows. So I have a significant problem with the FDA. I wrote the FDA a letter March 8th. I wrote the same people a follow up letter May 25th. Sent them a subsequent letter a few months back, finally looping in Gottlieb, who oversees this outfit. And let me make it really clear, they failed inspections back in 2016. And some of the issues include filth, bacteria, non- testing of product.
GRANT WILLIAMS: Now, these are FDA inspectors? MARC COHODES: These are FDA, these are 483s. Someone named Elliot Favus put out a report, and he detailed, I think 13 FDA 483s. GRANT WILLIAMS: 483 is a notice.
MARC COHODES: It's a notice that something is wrong in a plant. You have, let's just call it, between 15 and 90 days to fix.
GRANT WILLIAMS: It's like the public health inspector at a restaurant. Fix this.
MARC COHODES: Fix this or else. You don't fix it, you get a warning letter. You get a warning letter, you're out of the game.
GRANT WILLIAMS: And are you under obligation to disclose those to shareholders or not?
MARC COHODES: Yeah, it's important. So not only have they not to this day. And I think we're kind of January-ish of 2019, they still haven't cleaned up the 483s from 2016.
GRANT WILLIAMS: How is this possible? How can this possibly happen?
MARC COHODES: Well, there's one of two ways. Either the FDA, and that would be Mary Malarkey, Robert Sauceville, Donald Ashley, Alan Morrison, and the head man, Gottlieb. Either these people are so grossly incompetent that they can't figure this out, or someone has been paid off, or bribed, or incented to look the other way. It's one of the two. And the crazy part is, in my letters, it's not about the stock price. It's about fucking public safety. And the FDA, either through price or Isakson, or God knows who else, has been incented, or coerced, or bent to look the other way.
And they don't respond to my letters. For all I know, they throw them in the trash. But I keep barking, because it's not right. It's hugely wrong. And they make a lot of money at MiMedx. There have been grand juries convened about DOD docs overusing this product. Some people have used upwards of a million a year of this shit, and it's unapproved. And it's going into veterans. And this is unapproved dangerous witchcraft that the FDA said back in 2014, they got an untitled letter which basically said, you shouldn't be selling this stuff, and you sure can't be marketing it. You can't be marketing it.
And I have a letter from Pete to Mary Malarkey basically saying, fuck you, we're going to keep selling it. Great. But then you fail inspections. You don't clean up the inspections. You don't make it right. And you keep selling this stuff. And they recently had a meeting, as in weeks ago, at MiMedx to try to attempt to finally address this situation. But they haven't, not, not, not stop selling the stuff. They keep selling it like there's never an issue. And it's all being covered up. It's all being covered up. I emailed Coles this, who's the so-called acting CEO. They know that I know, but they keep doing it. They keep doing it.
GRANT WILLIAMS: To me, while I listen to all this, and I've looked through a pile of documents you put together this high. I'm astonished at how many people would have to be involved in this thing. This is not one guy or two guys trying to get cute. This is a systemic operation that would have to include so many people at the top level as to be unfeasible to me.
MARC COHODES: Well, I say this to people. I waste my money in my attorney bills, but I need to always stay on the right side of right. And he keeps me on the right side or right all the time. But in a different life, I would come back and just bribe politicians. I would get my Johnny Isakson. Because if you get a Johnny Isakson, who says- and he said on the record, that Pete is a great man, a lifelong friend, and a great Georgian, you get a guy like that in your pocket, an 80-year-old senator who has been doing this forever. You get a guy like that, where his chief of staff lies to the Atlanta Journal Constitution, it lies to The Wall Street Journal, and Pete puppets him around.
You make a call, I guess, to the FDA, and says, look the other way, leave this guy alone. You make a call to the SEC, investigate this guy, quash this investigation. This shit goes on because I am living, walking, talking proof that he can order an FBI investigation on me. No, not an investigation. A visit. To tell me to stop what I'm doing or there will be consequences.