Opinion ID: 786598
Heading Depth: 3
Heading Rank: 4

Heading: Details of AHD's Pre-Sales

Text: 15 Alpharma's AHD conducts business with its customers through a staff of sales representatives. At all times relevant to the Complaint, these sales representatives were supervised by regional sales managers. The sales managers reported to Randy Maclin, AHD's vice president of sales and marketing within the United States, and Loren Williams, vice president of sales and marketing for AHD in Latin America. In a typical transaction, sales representatives would provide the company's Customer Service Department (CSD) with the details of the purchase, including whether the product was to be shipped, picked up, or placed on customer hold. The CSD would then enter the transaction into the company's Business Planning and Control System (BPCS), which allocated inventory for the sale and created an invoice. Each warehouse would conduct a monthly inventory, the results of which were submitted to Alpharma's headquarters in New Jersey. However, the Brazil division of AHD did not use the BPCS. Instead, it recorded sales by sending copies of sales reports and financial statements directly to Alpharma's New Jersey headquarters, which then entered the data into the BPCS. Further, Michael Weaver, AHD's vice president of finance and one of Andrews' subordinates, made monthly trips to Brazil to review sales records and audit inventory. Based on these facts, plaintiffs allege that personnel in Alpharma's New Jersey headquarters were aware of or should have been aware of and able to access sales results from its Brazilian operations. 16 Beginning when he became president of the AHD in May 1997, Andrews is alleged to have engaged in a number of questionable practices, including (1) telling AHD staff that he would take whatever action was necessary to raise Alpharma's stock price, (2) firing AHD sales representatives and managers and replacing them with former co-workers from his prior employer, and (3) no longer seeking input from sales representatives as to appropriate yearly sales quotas. This last action was relevant, as year-end bonuses were tied to the staff's ability to meet the sales goals set by Andrews. Plaintiffs allege that these purportedly unrealistic sales targets caused employees to engage in questionable activities such as the pre-sales described above. Because the number of products on customer hold could be determined from an examination of BPCS entries, plaintiffs conclude that examination of such entries did or could have alerted [defendants] to the fact that [AHD] was inflating its results by, essentially, shipping to itself. 17 The Complaint goes on to detail a number of setbacks and expensive acquisitions which purportedly weighed on the company and pressured executives to increase revenue in AHD. Plaintiffs allege that, as a result of these difficulties, the use of pre-sales spread beyond AHD. Specifically, they assert that Knut Moksnes and Laritz Valderhaug, the president and senior controller of the Aquatic Animal Health Division (AAHD), asked AAHD controllers to record unreceived cash as accounts receivable despite the fact that the products in question had not yet been shipped to the customer. This resulted in the resignation of one AAHD controller, who cited her concerns during an exit interview, which, she believes, was documented and placed in her personnel file at Alpharma's New Jersey headquarters. The Complaint further alleges that Loren Williams, who served until October 2000 as AHD's vice president of sales and marketing for Latin America, resigned over similar disagreements with management but that Williams is unable to assist plaintiffs' counsel due to a non-disclosure agreement.