Internal Fixation Systems (IFS), Inc. was founded in Miami in 2007 to market and distribute orthopedic screws, plates and implants. The company claims to offer products at half the price of their competitors. By May 2011 the company began trading as an over-the-counter stock. Investors included physicians from the Miami area.
This past August a group of the 29 investors filed suit against the company, its CEO, Stephen Dresnick, M.D. and former Miami Dolphin football star Bob Kuechenberg, a company director. Apparently they weren’t happy with their stock plummeted from $2.58 to a penny a share in less than a year.
According to a September 1 story in the Miami Herald, the investors allege that Dresnick and the company failed to provide timely information about several matters, including a loan last spring that was an improper agreement which allowed the defendants to secretly profit from the sale of one million shares. They also allege that the company didn’t quickly reveal that it was evicted from its manufacturing facility in April.
Dresnick, who took charge of the company in 2009, denied the allegations to the Herald. “I have never sold even one share of IFS stock and even a minimum of inquiry would have shown that to them.” Dresnick, according to the company’s website developed several companies, including Sterling Healthcare.
According to the company’s most recent financial report noted by the Herald, the company lost $1.3 million in the past six months with only $293, 000 in sales. The report said that there was “substantial doubt about our ability to continue as a going concern. … We are seeking to raise capital through the sale of our securities. Without additional funding, there can be no assurances that we will be able to continue our operations.”
The loan in question came from an investment company giving the investor stock that could be immediately sold, the complaint alleges. A loan company executive asked IFS to create a list of 14 potential press releases and later asked IFS’ acting CFO to send him a list of proposed headlines. According to the complaint, the CFO declined the request and after meeting with the company’s SEC counsel, expressed concern about the proposed loan. The counsel allegedly told the CFO that “the deal was not proper in many respects.”
The CFO is not named in the complaint. But the Herald reports that Dresnick and others identify her as Laura Cattabriga. The complaint said she resigned on April 24, along with the vice president of sales, Ken West.
Dresnick told the Herald that the two “were pushed out due to poor performance” and since then “have been attempting to take control of the company.”
Raymond Robinson, the lawyer for Cattabriga and West, is reported in the Herald, saying that wasn’t true. “Neither of my clients did anything wrong.” He said the two disagreed with what was happening at the company and decided to resign.
According to Robinson, both have filed suit in circuit court claiming that IFS violated their employment contracts and since both also own large amounts of stock, the lawyer is considering a federal lawsuit similar to that of the 29 investors.
Dresnick told the Herald that the case “is totally without merit” and was sparked by two vengeful former employees.
