Lawsuit Accuses McGaw Buyer of Securities Fraud
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SANTA ANA — The former chairman of an Irvine medical products company filed a lawsuit Thursday in federal court against the Miami company that acquired it, accusing that company and its chairman of securities fraud, lawyers said.
James M. Sweeney alleges in the lawsuit, filed in U.S. District Court in Santa Ana, that IVAX Corp. and Chairman Phillip Frost misrepresented their company’s financial condition before it acquired McGaw, a maker of intravenous products, last March. IVAX is a leading producer of generic pharmaceuticals.
Lawyers for Sweeney, who resigned from McGaw in February, said in a statement that IVAX issued false and misleading predictions of the value of its best-selling product, a drug called Verapamil. But when the first-quarter results were issued, earnings declined compared to the fourth quarter, which led IVAX’s stock to drop from a high of more than $38 to $16.63.
Consequently, Sweeney alleges that McGaw shareholders did not receive the proper value from the $600-million transaction.
Neither Sweeney nor Frost or their lawyers could be reached for comment.
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