Core Summary

  • The U.S. Securities and Exchange Commission (SEC) said on Tuesday it had settled charges against Adamis Pharmaceuticals and its former chief financial officer, Robert Hopkins, over an alleged fraudulent scheme that generated revenue through illegal prescriptions.
  • Adamis (now DMK Pharmaceuticals) and Hopkins obtained a "substantial portion" of the company's revenue between 2016 and 2021 through illegal prescriptions written by a veterinarian who was compensated under a sham consulting agreement, the SEC said in a Tuesday order.
  • As part of the settlement, the company agreed to "cease and desist" from the alleged misconduct and pay $334,314 in disgorgement and prejudgment interest, according to the order. Hopkins was barred from serving as an officer of a public company or practicing as an accountant before the SEC.

In-Depth Analysis

Adamis, once a specialty biopharmaceutical company, merged with private company DMK Pharmaceuticals in 2023, and the surviving public company was renamed DMK Pharmaceuticals. The company filed for bankruptcy last year.

According to the SEC's order, Adamis generated revenue through illegal conduct from April 2016, when it acquired US Compounding, until the end of October 2021, when US Compounding ceased operations.

The SEC alleged that sales representatives at US Compounding improperly submitted some animal drug orders that falsely listed a veterinarian as the prescribing doctor. The veterinarian allegedly received kickbacks disguised as "consulting fees," which were falsely recorded as legitimate expenses.

The SEC said Hopkins entered into an agreement on behalf of Adamis that allowed the veterinarian to be paid monthly at a consulting rate of $100 per hour, when in fact, the veterinarian's monthly fee was based on an oral side agreement that he would receive a 10% commission on the amount of illegal prescriptions.

The SEC did not immediately respond to a request for comment. A spokesperson for DMK could not be immediately reached for comment.