Home Personal Money SEC says Provectus execs spent investors’ money on personal pleasure

SEC says Provectus execs spent investors’ money on personal pleasure

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Craig Dees of taking at least $3.2 million between January 2011 and February 2016. He resigned from the company Feb. 29, 2016, but now faces 10 counts of fraud.

“Although Dees represented that the funds he obtained were to be used for expenses that he incurred on behalf of Provectus, in reality Dees was treating Provectus as his personal piggy bank and used the Company’s funds to pay for his personal expenses, including but not limited to, entertainment, clothing, cosmetic surgeries for female friends, large tips at Hooters and other restaurants, as well as personal travel,” the Securities and Exchange Commission asserts in the lawsuit.

He did so by submitting “hundreds of false cash advance requests and expense reimbursements,” failing to provide documentation for most and falsifying those he did provide, according to the suit.

“For example, in December 2015, Dees paid over $13,000 to cover breast enhancement surgery and other cosmetic procedures on behalf of female acquaintances,” the suit says.

Other Provectus executives were supposed to review that spending, but one of those responsible — former chief financial officer and later interim CEO Peter Culpepper — is alleged to have taken nearly $200,000 himself in a similar manner, according to the SEC.

Further allegations

Knoxville lawyer Jeffrey Whitt, representing Dees, didn’t return a request for comment Friday. On Dec. 12 he told Law 360 news service via email that his firm made no statements on pending litigation.

Provectus and Culpepper consented to separate SEC orders, without admitting or denying investigators’ findings, according to an SEC news release.

Dees said he was leaving Provectus for “health and personal reasons,” at the same time announcing a review of company policies including executive compensation.

Alfred Smith IV replaced Dees as board chairman, while Culpepper became interim CEO; and Wachter, the chief technology officer, occupied Dees’ board seat.

In March 2017, Provectus announced it would restructure its board and seek up to $20 million in new financing. When stockholders PRH Group paid $2.5 million into an escrow account, Smith, Scott and Kelly McMasters would resign from the board, according to an agreement at the time. They would be replaced by Dominic Rodrigues, Bruce Horowitz, and a PRH appointee.

After another $5 million was raised – expected in June 2017 – Wachter and Jan Koe were to resign from the board as well. At that time Edward Pershing – who is also a PRH member – and another PRH nominee would join the board.

According to Provectus’ website, that first round of changes took place, but the second apparently didn’t: Smith, McMasters and Scott are off the board, but Wachter and Koe are still members, while Pershing is listed as “observer.”

Scott remains as president and Wachter is still chief technology officer, while Horowitz is chief operations consultant.

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