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.