INDIANAPOLIS (AP) - The U.S. Department of Labor has sued the founder of an Indianapolis toxicology laboratory, alleging he sold the company to employees in 2009 at a vastly inflated price.
The department’s lawsuit, filed Friday in U.S. District Court, says 70-year-old Michael Evans should return millions of dollars in “unjust” gains from the sale of AIT Laboratories because it violated federal laws governing employee stock ownership plans. Evans sold his 88 percent stake in the company to its 300 employees in 2009, the lawsuit says.
Evans’ attorney, Andrew McNeil, told The Indianapolis Star (https://indy.st/Z8woED ) that his client intends to fight what he called the government’s “faulty” charges.
The suit says Evans used an “unreliable” valuation of $90 million for AIT when only a year before an Indianapolis investment firm had put AIT’s value at $17 million. AIT itself had calculated its worth at the time at $5.2 million in its financial statements, the lawsuit alleges.
McNeil said $90 million was a fair price. The newspaper reported that Evans made a 10-year, $79 million loan to finance most of the employee stock plan’s purchase of AIT.
“Procedures in place at the time of the employee stock transaction were appropriate,” he said. “Valuations … were consistent with all industry standards. The valuations were sound.”
The lawsuit alleges that the income forecasts did not reflect increased competition or the beginning of lower government and insurance company reimbursements for specimen testing.
Evans, a 70-year-old former Indiana University School of Medicine professor, is major donor to Indiana causes. He has pledged $52 million to Marian University’s new Indianapolis medical school and also donated $10 million to St. Joseph’s College in Rensselaer, his alma mater.
Evans started AIT as a toxicology lab in 1990 and built it into a full-service testing site for blood, urine and tissue specimens. Employers, hospitals, police agencies and other customers across the country used the lab.
Information from: The Indianapolis Star, https://www.indystar.com
Copyright © 2021 The Washington Times, LLC.