2 former SeraCare Life Sciences execs settle regulator lawsuit

San Diego Business Journal, August 11, 2008 by Mike Allen

Two former top executives with SeraCare Life Sciences Inc., previously based in Oceanside, settled a lawsuit July 31 filed against each of them by the Securities and Exchange Commission for their roles in an accounting fraud at the company in 2005.

The defendants, Michael Crowley, former chief executive officer, and Jerry Burdick, former director and interim chief financial officer, each agreed to pay $25,000 in civil penalties and were enjoined from future SEC violations. Neither admitted nor denied guilt regarding the charges filed by the agency this year.

According to the SEC complaints, the fraud at SeraCare, which provides biological products to the diagnostic and drug discovery industry, involved the non-disclosure of material financial information in its securities filings.

The SEC alleged that Crowley, a resident of San Diego, failed to disclose that a bill-and-hold sale representing 11 percent of the firm's quarterly earnings before taxes was canceled by a major customer.

Burdick, a resident of Westlake Village, allegedly released improper inventory reserves he had created following a 2005 acquisition, which inflated the company's earnings before taxes in the second and third quarters of 2005.

The SEC also alleged that Burdick caused misrepresentations to company auditors by backdating a letter permitting the company to book a sale for nearly $1 million at the close of the 2005 fiscal year.

In 2006, SeraCare fired its four top executives, including Crowley, and filed for Chapter 11 bankruptcy. In May of that year, it moved manufacturing operations to Massachusetts, and relocated administrative offices there soon after.

Last year, SeraCare emerged from bankruptcy. In June, its stock--traded under the symbol SRLS--was re-listed on Nasdaq, where it was trading at $4.53 on Aug. 4, giving it a market cap of $81 million.

E-mail news of local public companies to Mike Allen at mallen@sdbj.com.