Business briefs

DAVIS — A produce trade association announced Monday that it has pledged $2 million to fund a research center at the University of California, Davis dedicated to reducing food-borne illnesses in fresh vegetables and fruits.

The Center for Produce Safety will be housed within UC Davis’ existing Western Institute for Food Safety and Security and distribute research grants to scientists from around the country, said Jerry Gillespie, the institute’s founding director.

"This is a major step forward as far as industry stepping up and providing funds for scientific research,” he said.

Two former Endocare executives indicted on fraud charges

LOS ANGELES — Two former top executives at medical device maker Endocare Inc. were indicted Monday in alleged scheme that bilked investors out of $200 million by inflating revenue and concocting sham transactions. A federal grand jury in Santa Ana charged Paul Mikus, the former chief executive, and John Cracchiolo, a former chief financial officer, with 27 counts.

The indictment alleges securities fraud, false statements to federal regulators and wire fraud, among other charges, between 2001 and 2003.

Mikus, 41, and Cracchiolo, 50, have agreed to surrender to federal authorities later this month, authorities said.

Mikus’ attorney, Thomas Bienert Jr., said he hadn’t seen the indictment yet and had no immediate comment. A phone message left for Cracchiolo’s lawyer was not immediately returned.

Irvine-based Endocare manufactures and sells a medical device, known as the Cryocare Box, used to freeze cancerous tissue for treatment of prostate cancer.

According to prosecutors, Mikus and Cracchiolo overstated the number of past and projected procedures involving the device.

In connection with a 2001 stock offering, the two falsely told investors that the company’s largest distributor was immediately reselling Cryocare Boxes for use in medical procedures. In fact, the devices languished unused and unopened in the distributor’s warehouse, prosecutors said.

In other cases, the men claimed to investors, accountants and regulators that some of its Florida customers were obligated to pay for the devices when, in fact, they were not.

As a result, the company falsely inflated revenue by $4.2 million in November 2001. Three months later, the two executives concealed that the transactions were fake when they claimed the company had beaten revenue forecasts by $500,000.

When allegations of fraud surfaced in 2002, the company’s stock price collapsed on the Nasdaq Stock Market, causing more than $200 million in investor losses, according to prosecutors. The company was delisted in January 2003 and now trades over the counter.

The charges in the indictment carry maximum penalties of 430 years in prison and $21.75 million in fines.

Mikus and Cracchiolo also face securities fraud charges filed in a civil case brought by the U.S. Securities and Exchange Commission.