Posted by Amanda Chapel
Federal Grand Jury Returns 50-Count Indictment
Here's a classic courtesy of the Ruder Finn. It's a PR debacle for the record books. It's certainly a great case history for Schools of Communications. Leading PR firm takes on a biotech startup and 2 years later a federal grand jury returns a 50-count indictment for securities fraud.
Here's a brief summary of the chronology of events:
--- In January 2004, Ruder Finn announces that they are the Agency of Record for a biotech company, Efoora. The PR firm uses the release to puff both the firm and their new client. In it EVP Howard Solomon said, "Efoora is widely regarded as one of the top emerging biotech players in the Midwest, and we feel very good about the company's business prospects. Our communications efforts will play a very important role for Efoora in the next 12 months, which will without question be a milestone year for the company. Furthermore, this account is particularly strategic for our Chicago office as we look to capitalize on the Midwest's growing biotech market." (See release below.)
--- Ruder Finn then places a huge "puff piece" in Chicago Sun-Times. On February 5, 2004, the snookered Howard Wolinsky, Business Reporter for the Chicago Sun-Times wrote, "Medical diagnostics firm 'expecting a breakout year'. Quote: "Buffalo Grove-based Efoora Inc., a medical diagnostics company, is on the verge of hitting a trifecta ... and maybe more. This year, the start-up expects to have its first three tests for the U.S. market approved by federal agencies.
--- This brings on incessant heat from muckraker celebrity and Sun-Times competitor, Ron May. Ron in his publication by the same name, The May Report, subsequently dogged Efoora for the next year uncovering what seemed a constant flow of malfeasance.
--- On March 3, 05, The May Report broke the story about a Fed raid. QUOTE: "Federal agents, including the SEC, the FBI, and federal postal inspectors raided the offices of Efoora on Wednesday, March 2nd, in Buffalo Grove, and after fourteen hours leave with two mini vans' full of documents and boxes. Sources say that the case is already made, this was just icing on the cake." (NOTE: At this time, Efoora is still listed online on Ruder Finn's client list.)
--- And on May 18, 2006, a federal grand jury returned a 50-count indictment against the onetime executives of Efoora for allegedly swindling thousands of investors out of millions of dollars. (See release below.)
What did Solomon mean exactly when he said, "we look to capitalize on the Midwest's growing biotech market"?
What is Ruder Finn's culpability?
Did the firm know or should they have known?
When exactly did they resign the account and what took them so long?
Is PR a "manipulative and deceptive device" under the law? (See law below.)
How common is this practice in the PR Industry?
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after investing $20,000.00 in stocks, where are the investors headed as far as an investor, have we lost all monies without any compensation, or is the present stocks in virotech still good or what? please respond. regards p. miller
I have the same basic question of what happens to the Investors money? I keep writing to the Efoora and Virotech and never get an answer. Are there any responsible parties in this?