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Criminal charge filed against Unilife whistleblower

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The drama continues at York County-based Unilife Corp., where the ex-employee who filed a high-profile lawsuit against the company has been charged with a third-degree felony, and his attorneys have countered by asking a judge to find Unilife in contempt of court for violating a confidentiality order.

Talbot “Todd” Smith, Unilife’s former vice president of integrated supply chain, filed a federal lawsuit against the company in August 2013, accusing it of misleading investors and failing to comply with FDA regulations.

Several subsequent lawsuits filed by other plaintiffs relied heavily on Smith’s charges; one of those was dismissed earlier this year, but litigation in Smith v. Unilife has continued.

Confidentiality concerns have factored largely in the proceedings, with a protective order initially entered on Jan. 15, 2014. On July 1, the confidentiality order was amended slightly to allow Smith to share information with attorneys who are representing him in a whistleblower report he made to the Securities and Exchange Commission in July 2012.

“Your requests include some highly sensitive competitive information,” Chris Moran, an attorney representing Unilife, said in supporting documents included in the case, arguing for the confidentiality agreement that was reached. “The disclosure of some of that information might well cause serious harm to my clients.”

The basis for the charge against Smith is a 79-minute recording that he secretly made of Unilife’s chief operating officer, Ramin Mojdeh, in a meeting "regards to business related issues due to problems with Talbot Smith in the company" in June 2012, according to the court filings.

The filings say Smith gave a deposition on the recording under the confidentiality order on June 17, and on June 19 an attorney retained by Unilife who was not part of the case met with a member of the Northern York County Regional Police Department, after which a felony charge of intercepting communications was filed against Smith on June 20.

Smith, 49, resides in Somerset, N.J., according to the court records.

Smith and his counsel say he disclosed the existence of the recording in February under the confidentiality order; believes that it is not in violation of the Pennsylvania Wiretap Act; and never disseminated it to any third party.

The charge was filed by someone not included in the confidentiality agreement, they argue, and therefore constitutes a violation of the judge’s confidentiality order and should result in Unilife being held in contempt.

“It is clear that the goal of initiating criminal process was for the Defendants to gain an advantage in this civil litigation,” their filing says. They are asking the judge to find Unilife in contempt of court and to make it pay Smith’s costs in battling the felony charge, in addition to dropping the confidentiality order.

The defendants disagree, responding, “This Court should reject Plaintiff’s attempt to use the Protective Order as a shield with which he can avoid the consequences of his own criminal acts.”

The judge has not yet ruled on the issue. Comment from the parties involved was not immediately available this morning.

Unilife is traded on the Nasdaq under the ticker symbol UNIS.

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