* Pharmacy owners were paid at least $16 million in
* Mercedes and BMW leases put on pharmacy's tab
* Meningitis outbreak has killed 44 people so far
(Recasts; adds comment from lawyer, 2012 sales figure)
By Tim McLaughlin
BOSTON, Jan 22 Creditors of the bankrupt
pharmacy linked to a deadly U.S. meningitis outbreak are
investigating $16 million in salary and shareholder
distributions made to company owners in 2012, a lawyer for the
group said on Tuesday.
Some of the transfers from the New England Compounding
Center, which had 2012 sales of $32.4 million, followed the
discovery last fall of the meningitis outbreak that has killed
44 people, according to documents filed late on Friday.
"The bottom line is that instead of using the money to
remedy the pharmacy's problems, which now look like a ticking
time bomb, they took the money out," said David Molton, a lawyer
at Brown Rudnick LLP, which is representing the official
committee of unsecured creditors in NECC's bankruptcy.
The unsecured creditors committee, which includes victims of
the meningitis outbreak, plans to meet on Tuesday to discuss
whether the payments to insiders were proper.
Bankruptcy law allows creditors to go back two years before
the Chapter 11 filing and claw back transfers and payouts deemed
improper, or "fraudulently conveyed," Molton said in a telephone
NECC owner Carla Conigliaro, the largest shareholder in the
privately held company, received nearly $9 million in 2012,
according to court papers.
NECC also paid about $18,000 on her American Express card
for purchases from gas stations, restaurants, the Apple Store
and other places.
Barry Cadden, NECC's chief pharmacist, received about $3.2
million in 2012, filings show. His wife, Lisa Cadden, received
about $2.8 million. Greg Conigliaro, a recycling entrepreneur
who is Lisa Cadden's brother and Carla Conigliaro's
brother-in-law, received about $1.6 million.
The filings also showed that Framingham, Massachusetts-based
NECC had made lease payments for a 2012 BMW X5 and 2011 Mercedes
Benz GL-550. NECC paid, for example, $1,251 a month for Carla
Conigliaro's Mercedes Benz lease payment, court papers show.
Brown Rudnick LLP, in a statement, said NECC had paid a
total of more than $21 million to the pharmacy's four primary
owners and other insiders.
Medical Sales Management, which shares some common ownership
with NECC, received more than $4 million from NECC in 2012,
court papers show.
A spokesman for NECC did not return a telephone call seeking
NECC filed for bankruptcy protection last month after U.S.
authorities shut down its pharmacy operations amid a meningitis
outbreak that has killed 44 people and sickened 678 others,
according to the U.S. Centers for Disease Control.
NECC shipped thousands of vials of a fungus-tainted steroid
to medical facilities throughout the United States, according to
(Reporting by Tim McLaughlin; Editing by Lisa Von Ahn)