(FOX 25 / AP) – The owners of the New England Compounding Center, which is linked to a fatal meningitis outbreak, pulled millions of dollars out of the company in the last year.
According to a bankruptcy court filing, the four family members, who served as NECC's directors, received more than $16 million in wages and profits from the firm from December 2011 through November 2012, roughly equal to half its sales during this period. The largest payout went to firm's majority shareholder, Carla Conigliaro, who received $8.7 million.
The vast majority of the money paid to the owners was distributed before the outbreak was discovered in Tennessee in September.
The Framingham-based company filed for Chapter 11 bankruptcy last month, saying the step was needed to establish a compensation fund for victims. Thus far, the contaminated steroid produced by the pharmacy to mainly treat back pain has killed 44 people and has sickened more than 600 nationwide.
State inspectors at the company's Framingham facility have flagged unsanitary conditions and said the company shipped out drug batches suspected in the outbreak before tests had confirmed their sterility.
The firm reported that 130 people had filed lawsuits at the time of the filing, and it has told attorneys that it won't have sufficient funds to adequately compensate victims. In its filing Friday, the firm listed assets of about $1.6 million and liabilities of $885,000 from its unsecured creditors, not including any court judgments against it.
The filing late Friday also showed that before the company shut down in early October, its net sales were on pace to double over just two years. The pharmacy had increased its net sales from about $20 million in 2010 to $32 million in 2012, before it closed with a quarter of the year remaining.
Friday's filing indicates that between December 2011 and November 2012, co-founder Barry Cadden, the company's chief pharmacist, received $3.2 million, including a bi-weekly salary of about $17,900. His wife, Lisa Cadden, received about $2.8 million, mainly in shareholder payments.
Co-founder Greg Conigliaro, Lisa Cadden's brother, received about $1.6 million. Carla Conigliaro is the wife of Doug Conigliaro, Greg's and Lisa's brother.
The family members reportedly put $90,000 on corporate credit cards, including charges made -after- the company shut down, though less frequently and mainly for expenses such as gas, parking or food at stores such as Panera Bread.
A hearing is scheduled Thursday in U.S. Bankruptcy Court in Springfield on a request for an independent trustee to replace an accountant hired by the NECC to lead it through Chapter 11 proceedings.
On Tuesday, the creditors represented by Brown Rudnick backed the request in a court filing, saying it's "beyond all reasonable expectations of the human condition" for people whose family members have died due to an NECC-made drug to trust its hand-picked choice to set up the compensation fund.
The company has said appointing an independent trustee would delay progress toward establishing the fund.
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