Orthopedic Development Corp. update

Orthopedic Development Corp.’s president said in an affidavit in a federal court case in North Carolina that he had never engaged in business in that state, had not gone there to recruit a sales executive or “otherwise traveled there.’’


But Sharesleuth.com, which posted an investigative report on ODC on June 8, has copies of e-mails that appear to disprove those assertions.


James Doulgeris, who heads ODC, submitted the affidavit last week in connection with a motion to dismiss the case in North Carolina or halt it pending the outcome of a related case in Florida. The suit in North Carolina was brought by Dan Grayson, who was hired in November as vice president of sales for ODC’s spine stabilization product and was fired in May.


The e-mails exchanged last summer between Doulgeris and Grayson include messages from Doulgeris that provide details of his travels to North Carolina for business meetings. Those details include flight numbers and times, and the names and locations of the hotels in which he stayed.

The e-mails show that Doulgeris traveled from Tampa to Charlotte last July 6, with marketing materials and instrument samples for Grayson, who at the time ran his own medical device distributorship.

Grayson became a distributor for ODC’s spine-stabilization product, called TruFUSE, the following week.

Grayson later became vice president of sales for the ODC subsidiary that markets TruFuse. He was fired in May after raising questions internally about TruFUSE and some of the claims the Clearwater-based company was making about the product.

Grayson sued, claiming ODC breached his contract and fraudulently induced him to enter the contract by making false claims about its product and its business activities.

ODC filed its own suit in state court in Florida, claiming that Grayson and an investor named Terje Gronlie acted together to disparage the company. Among other things, the suit alleged that Grayson breached his fiduciary duty to ODC and that Gronlie was behind a series of e-mails sent to officers, directors and others with ties to the company.

Grayson said Tuesday he questioned the central claims in Doulgeris’ affidavit. "I don’t see how Doulgeris can say, under oath, that he has never been to North Carolina, or had business there, when he signed my distributorship on July 11, 2006, to sell TruFUSE,’’ he told Sharesleuth.

Doulgeris said Tuesday that his statements in the affidavit referred specifically to whether he went to North Carolina regarding Grayson’s employment by the company.

“My response was truthful, accurate and supportable,’’ he said in an e-mail.

ODC has sued Grayson in state court in Florida, claiming that he and an investor named Terje Gronlie acted together to disparage the company. The suit alleged the Gronlie was behind a series of e-mails sent from anonymous accounts to officers, directors and others with ties to the company

The correspondence between Doulgeris and Grayson shows that Doulgeris went to North Carolina twice in August 2006. On one of those trips, he and Grayson met with representatives of another company that now distributes TruFUSE.

The affidavit said Grayson’s suit did not specify where Doulgeris was when he allegedly made the false claims to Grayson. The affidavit noted, however, that the statements supposedly were made while the company was recruiting Grayson to run its TruFUSE subsidiary, called MinSURG Corp.

Doulgeris said that happened outside of North Carolina. "Since I have never traveled to North Carolina to recruit Grayson, or otherwise traveled there for that matter, such statements would have been made prior to Grayson entering into the employment agreement, which occurred when Grayson visited MinSURG’s office in Florida,’’ he said in the affidavit.

Grayson told Sharesleuth he did not go to Florida until Oct. 12, when he met with ODC’s board of directors as one of the final steps in the hiring process.

The e-mails show that he and Doulgeris had already discussed title, compensation and other details by the end of September 2006. In one message, regarding the efforts to fill the sales position, Doulgeris wrote: “Dan, I am sold. No one else comes close.’’

ODC says its new spinal implant procedure, which uses cadaver bones inserted in vertebrae, can reduce or eliminate pain for many of the millions who suffer from chronic back problems.

But former insiders have told Sharesleuth that ODC has encountered design and performance problems with TruFUSE. They added that documents given to investors in an $8 million stock placement overstated the number of patients who have been treated using the procedure, and may have overstated the results.

Submitting a knowingly false affidavit in U.S. District Court can be grounds for perjury charges.



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