Correction: A version of this story that ran in print on Aug. 21 incorrectly stated Parker H. Petit was the president of the Georgia State University Foundation’s Steering Committee. Petit is the chair of the committee.
“He doesn’t stop until he destroys people’s lives.”
Those were the words spoken by Mary Armstrong, a former account executive from MiMedx, the biopharmaceutical company based in Marietta, in reference to Parker H. Petit, one of Georgia State’s top donors and former CEO and Chairman of the Board at MiMedx until his early July resignation.
In August of 2017, Georgia State announced Petit’s pledge of $10 million to the Georgia State Athletics department. In return, Georgia State branded the new football field with Petit’s name.
Now, Petit’s former company is embroiled in at least four federal investigations, and accusations of poor business practices are threatening the legacy of one of Atlanta’s most prolific philanthropists.
Just months before the investigations began, Petit gifted 325,000 shares totaling over $5 million of MiMedx stock, which has now dropped 74 percent since Petit’s donation.
However, that stock was potentially inflated by channel stuffing, which is the practice of a company inflating its sales and earnings figures by deliberately sending retailers along its distribution channel more products than they are able to sell to the public, according to Armstrong.
She had been working in the Dallas-Fort Worth area with MiMedx when she noticed what she considered was fraudulent behavior. While attending an annual national sales meeting in early 2016, Armstrong had the opportunity to sit down with members of the executive board, including Petit.
“After complaining for over a year about the different fraud and things going on in the field, I had the opportunity to sit down with all the executives at the national sales meeting,” Armstrong said. “They seemed to be disturbed by the amount of fraud I was describing to them and told me that they were going to implement change to correct them.”
According to Armstrong, those conversations fizzled out over the next couple of months after she consistently asked the board if a change would be made. She said she had a call with another employee at the end of March who also addressed the fraud.
“Five days later I was fired,” Armstrong said.
She believes that she was fired due to bringing up the fraud.
“[Petit] very much knew about the fraud,” she said.
Armstrong said that the biggest concern for Petit during her time at the company was its stock price.
“That was primary end all be all focus for Pete Petit,” she said. “He just never had communication that didn’t involve the stock price.”
The donated stocks were gifted to the Georgia State Foundation, which is the primary recipient for handling and distributing donations made to the university, at a price of $15.52 per share, according to MarketWatch. That’s almost $7 higher than another donation of the same stock he had gifted to an unnamed company earlier in March 2017. The Foundation cited a state code which protects a donor’s privacy when gifting money to a public institution. This prevented The Signal from gathering information from the Foundation directly.
The Foundation’s policy is to sell stock that has been gifted immediately after receiving it.
Armstrong said that there definitively was channel stuffing that could have inflated the stocks, thus allowing Petit to gift fewer MiMedx shares to the university for the same value.
“Without a doubt, there was significant amounts of channel stuffing. Whether it’s been proven in the court or not, I personally can attest to the amount of channel stuffing both in the VA and in commercial accounts through physician-owned distributors in Texas,” she said.
Whether or not the stock was actually inflated by potential channel stuffing is part of an ongoing investigation by the Department of Justice, Securities and Exchange Commision, Department of Veterans Affairs and the Food and Drug Administration.
Notorious short seller Marc Cohodes has been following the activity of Petit and the stock market for several months and criticizes him frequently on his website petiteparkerthebarker.com.
“He calls people liars. He calls people criminals. He’s quick to defame anybody and he is guilty of everything people have said about him. He’s cooked the numbers. He’s threatened people. The company has an awful policy towards women,” Cohodes said.
Cohodes had previously been called out by Petit himself, who said that Cohodes’ claims of MiMedx engaging in channel stuffing are “fraudulent” and “illegal.”
“He belongs in prison, and I think he’ll end up there,” Cohodes said.
He also said that the university may be in financial trouble with MiMedx if the company bankrupts from its falling stock prices and present federal investigations.
“If [Petit] donated overpriced stock, which he did, when the numbers were fake, if the company goes into bankruptcy, which I think will happen, the bankruptcy trustees may try to claw back at Georgia State and say they want the money back,” he said.
Petit’s involvement with the Foundation expands beyond just being a donor. He’s also the chair of its Steering Committee, which is responsible for deciding where funding goes and the direction the Foundation wishes to take.
“We don’t have any comment,” Andrew Schmidt, director of communications for Development and Alumni Affairs, said regarding Petit’s resignation at MiMedx and present involvement with the Foundation.
The Signal has reached out to Petit for comment on his involvement as the chair of the Steering Committee and matters related to MiMedx on several occasions by phone, but all calls and subsequent voicemails were not returned.
Regarding the fate of Petit’s name on Georgia State’s football field and science center, the Board of Regents of the University System of Georgia is the only body that controls the naming process of buildings in honor of individuals. If the Board of Regents finds any reason to question Petit’s character, the Board would investigate the claims and potentially decide to remove the titles.
I find it astounding that the the GSU Signal would write such an obviously poorly researched hit piece on one of the schools benefactors. Anyone following the true Mimedx story knows that Mary Armstrong is one of several disgruntled employees fired for cause who are now working with professional short sellers attempting to wrongly discredit both Pete Petit and his company Mimedx Group to their own gains by driving down the company stock. Several reporters have apparently been enlisted by the short sellers to flood the media with outright false and misleading stories about Mimedx recently without any regard for honesty and integrity and it is truly a sham. This story could not be farther from the truth and this will be resolved after the company’s self requested forensic audit is complete and the company vindicated of the false allegations from the short sellers. As a GSU alum myself, I am so disgusted that I will never give another dime to this school until this reporter is fired and the truthful side of this story published by the Signal.
@ Peter Siegel. In case you missed it, Pete Petit has ALSO been relieved of his duties at MiMedx. The Board of Directors said it was because of what the Audit Committee found in its investigation. MiMedx has also acknowledged that none of Pete Petit’s signed and certified SEC filings during any of the past 24 quarters can be relied upon.
Indeed, Pete Petit HAS been discredited. But if you think he’s been “wrongly” discredited, you need to take it up with the MiMedx Board of Directors.
Until Pete Petit gets his job back and the company says that his financial statements ARE reliable, then you owe this student journalist an apology.
Pete is 78 YO; still sits on the board of Mimedx. The company made a mistake on their financial statements so they cannot be relied upon. Two distributors should have been recorded on the cash basis instead of accrual. The short-sellers’ lack of accounting knowledge, and his desire to make money, is leading to the wild accusations. BTW, he is being investigated by the Alberta Securities Commissions.
ASC reveals probe into short-seller Marc Cohodes after rejecting call for cease-trade order http://infosurhoy.com/cocoon/saii/xhtml/en_GB/top-stories/asc-reveals-probe-into-short-seller-marc-cohodes-after-rejecting-call-for-cease-trade-order/
MIMEDX GROUP, INC. : Non-Reliance on Previous Financials, Audits or Interim Review (form 8-K) https://www.marketscreener.com/MIMEDX-GROUP-INC-13074817/news/MIMEDX-GROUP-INC-Non-Reliance-on-Previous-Financials-Audits-or-Interim-Review-form-8-K-26730281/
The author is a pathetic excuse for a journalist since you did not even attempt to obtain the company’s side of the story. You should remember the saying ” you can’t believe everything you read on the internet” because disgruntled employees and short sellers purposely spew misleading and defamatory stories about companies they are trying to harm. Restating financials does not constitute fraud. Many hundreds of companies restate financials each year and the boilerplate verbiage always reads the same. The truth comes out when the auditors are done and that will happen with Mimedx as well. The audit will probably turn up the usual minor issues, but no fraud. Let’s revisit this after the audit we’ll see who owes who an apology.
They HAVEN’T restated financials. They’ve informed Nasdaq that they CAN’T do it in a timely fashion. This does NOT tend to happen with legitimate companies who have done nothing wrong.
Wow, awful stuff. It’s a wise move on the part of the foundation to immediately liquidate stock donations.
RK, We live in the United States of America where people are innocent until proven guilty, These are allegations. More importantly, they are allegations from someone who is the spokesperson for hedge funds who have shorted hundreds of millions of dollars with of stock and sent bogus material to the regulators to profit from their short position on the stock. I would not take Cohodes’ claims seriously. He is already being investigated by Canadian regulators. His partner Fraser Perring who operates under the name “Viceroy” is being investigated by German and Australian regulators for fraudulent attacks on public companies (he already is a disgraced social worker from the UK who had his license revoked for endangering children) so consider the source of these claims. The awful stuff is coming from these folks, not from MiMedx.
LOL. The entire C-Suite has been forced to resign, the company has pulled down their previous communications disagreeing with the short sellers, and the company has admitted that NONE of Parker Petit’s signed and certified financial statements from the past SIX YEARS can be relied upon. The stock price has collapsed.
It’s true that no-one from MiMedx is in prison yet, but these are more than allegations. The Board of Directors said they made the decision to relieve Petit of his CEO duties because of what the Audit Committee investigation found.
“Self requested forensic audit” LMAO. Who are you kidding ? Pete’s got the SEC, FDA, DOJ, OVA and god know’s who else investigating him right now. Company is a cesspool.
Go Canes!
Your poorly written article is further proof that journalism is dead. Had you done one shred of investigation you would have found that Mr. Petit is a great American, entrepreneur, businessman, philanthropist, father and husband. A man that has devoted his life to improving and saving the lives of others. Instead, you chose to believe a former employee who was fired for cause. Nicely done.
We live in a great country where successful entrepreneurs often give back to those who helped them along the way. The article you have authored is a sorry excuse for “news” and reports wildly destructive personal inferences. Please explain what benefit to GSU or its faculty, students or alumni this article offers. I believe that the GSU Signal has published a “sponsored” article that feeds the egotistical needs of an unrelated alleging party or parties, in this story. The article is designed to portray Mr. Petit in the most disparaging terms. There is little basis in fact to your reporting. These allegations are untrue and unproven. This article only infers the negative and goes far beyond responsible fact based reporting. Reporting a “what may happen if “, to these wild and unproven allegations are proven true is just plainly of no benefit to anyone but the alleging parties. What if the allegations made are not true? Will you then write about the Mr. Petit’s generous donations and his US Military service or his successful corporate career? Will you take some time to research the tangible good MiMedx does and its 900 or so employees some of which may be GSU alum? Perhaps Mr. Solomons you will take some time to research the cutting edge, disruptive medical products that are already granted RMAT approval by the FDA to battle Osteoarthritis in persons desperately needing pain relief. Maybe you should also detail for your readers that Pete Petit a GSU alumni and benefactor helped bring a product to market that has helped millions of people. MiMedx did this all in the State of Georgia. They have successfully built a growing business into a major regenerative pharma Company that is profitable. The Company has unfairly been attacked by financial parties that profit by stock price declines brought about through negative innuendo, allegations and instituting doubt in the general investment community. The Company is taking steps to refute any and all doubts and its stock price will one day reflect its true successes. Take some time now and research this man you have so unfairly portrayed; Parker “Pete” Petit and this Company, MiMedx. Have some pride in your University and its benefactors. Mr. Petit certainly exhibited his pride and when he graciously donated millions to the University. I question your motives and purpose in publishing this article as it serves no real purpose other than to help those who supplied you the basic story and enticed or even possibly paid you to write it.
Thank you for your insight. It’s great to have another perspective on this! I’ll keep that in mind if we have a follow-up for this story.
Petit is a fraud and so is MiMedx. You will see in due time.
I love all the comments insisting that Pete Petit is above reproach. Instead of picking on a student journalist, you should take it up with the MiMedx Board of Directors! They are the ones who said MiMedx’s last SIX YEARS of financial statements were unreliable. They are the ones who stripped Pete Petit of his Chairman and CEO roles based on their findings in the Audit Committee investigation.
Journalists are known for their lack of understanding in financial matters. Take the 8-K to an accounting professor and have him explain it to you. An immediate apology from you and the student-journalist will be expected.
So, In The Know, how do you know Pete? LOL
I don’t know Pete. I have signed off on over 300 audits and have uncovered numerous frauds. It is not hard to see who the fraud is here. Go get the 8-K deciphered from an accounting professor. You are skating on thin ice.
The problem is that there *is* no 8-K, or any other disclosure.
MiMedx withdrew all of their reporting and guidance, stating:
“that the Audit Committee of the Company’s Board of Directors, with concurrence from management of the Company, has concluded that the Company’s previously issued consolidated financial statements relating to each of the fiscal years ended December 31, 2012, 2013, 2014, 2015, and 2016 and each of the interim periods ended March 31, June 30 and September 30, 2017 should be restated. As a result, all communications and financial information with respect to the fourth quarter of 2017 and the first quarter of 2018 should no longer be relied upon, and the Company is withdrawing all prior financial guidance issued for 2018”
see: https://mimedx.gcs-web.com/news-releases/news-release-details/mimedx-restate-certain-historical-financial-statements
In other words, they admitted that they have been lying to investors about all of their financial results for the last six years.
A few weeks later, the board forced Mr. Petit and his right-hand man, Bill Taylor, to resign.
https://mimedx.gcs-web.com/news-releases/news-release-details/mimedx-announces-leadership-changes-and-corporate-actions
Why??
Here is the 8-K. If you are short, you are also skating on thin ice. https://www.marketscreener.com/MIMEDX-GROUP-INC-13074817/news/MIMEDX-GROUP-INC-Non-Reliance-on-Previous-Financials-Audits-or-Interim-Review-form-8-K-26730281/
Infamous Short Seller Marc Cohodes Is About to Get Bitten by Badger https://www.fool.ca/2018/08/26/infamous-short-seller-marc-cohodes-is-about-to-get-bitten-by-badger/
What a great evening to revisit all of these posts that were supporting Parker Petit……… seems like the Mimedx audit comittee uncovered enough evidences of CORPORATE MALFEASANCE to terminate for cause!!! Where are all of the Petit supporters now ? If I worked at Mimedx I would be looking for a new job and quick – this house of cards is about to come tumbling down !!! https://www.ajc.com/news/breaking-news/petit-out-mimedx-for-cause/t07VB6xwrvdmVJqNkygAAL/
Not only fired for cause, but the board is clawing back his compensation! If you still believe Petit is an ethical and honest businessman, I encourage you to buy all the MDXG stock you can get your hands on!