The fraud charges rocked an up-and-coming Davis biotech company. On Thursday, five years after trouble surfaced, the former executive at the center of the case admitted his guilt.
Hector Absi, the former chief operating officer of Marrone Bio Innovations Inc., pleaded guilty to a single count of conspiracy in connection with a scheme to artificially inflate the company’s reported revenues.
Marrone Bio, a maker of environmentally friendly pesticides and other farm products, had been a leading light of the Sacramento tech scene. It raised millions of dollars in a public stock offering.
But the company’s hot streak came to an abrupt halt about a year later, in September 2014, shortly after Absi left Marrone, when it announced an internal investigation into its reported quarterly earnings results. Its stock price fell and investors sued, and the company eventually reported that its revenues for an 18-month period had been over-reported by $6.7 million.
Then, in February 2016, federal prosecutors announced they’d charged Absi with securities fraud, falsifying corporate records and other crimes. He was arrested at his home in Las Vegas.
Absi’s guilty plea, in U.S. District Court in Sacramento, represents “a good step towards closure for us,” said the company’s general counsel Linda Moore. She said employees are looking forward to Absi’s sentencing, scheduled for next Feb. 20 before District Judge Morrison England Jr. Absi could get 25 years in prison and a $250,000 fine.
Moore said the company has been rebuilding its business. Marrone saw revenue grow to $21.2 million last year, up from $18.2 million the year before. Losses shrank from $30.9 million to $20.2 million.
“We have recovered to a certain extent and we continue to recover,” Moore said.