Care A2 misled US regulators to pump up ASX float, distributor alleges
The founder and chairman of Care A2 Plus misled regulators in the United States in a bid to enter the lucrative infant formula market, increase its valuation and “personally receive a windfall” from an ASX-listing, the company’s former distribution partner has claimed in a Florida court.
Care A2 Plus founder Dominic Galati is being personally sued, along with chairman Walter Bungo and chief executive Steve Loader, by Gensco Pharma, which alleges the company incorrectly told the US Food and Drug Administration (FDA) that it had more than 1 million formula tins ready to ship.
Care A2 Plus chairman Walter Bungo. Peter Braig
The US formula market valued at $US4.3 billion ($6.65 billion) has been tightly controlled by three large players for years. However, a contamination issue at Abbott Laboratories’ Michigan plant, one of the largest in the country, created a major shortage of baby formula last year.
Few international groups were allowed to ship into the US at the time; while major companies like The a2 Milk Company were not immediately granted access. But Care A2 Plus, which had a tiny market presence in Australia, managed to secure approval and the company signed an exclusive agreement with Gensco in November.
However, Gensco now alleges in filings with in a Miami-Dade County circuit court that Care A2 Plus had a $5 million loss in the first six months of last year and “had paltry sales and substantial debt”, pushing Mr Galati and Mr Bungo to instead focus on a pending ASX listing plan to enrich themselves.
“Galati and Bungo were desperate to demonstrate that Care A2 could generate a new revenue stream and grow sales internationally… to be listed on the ASX and, in turn, so Bungo and Galati could personally receive a
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