Former Endocare execs indicted for fraud.

Paul Mikus and John Cracchiolo of Irvine, CA-based Endocare Inc. were indicted for allegedly creating false transactions and boosting the company's revenue, resulting in severe investor losses valued at $200 million. The former chief executive and chief financial officer, respectfully, were charged with 27 counts of alleged securities fraud, false statements to federal regulators and wire fraud, among other charges, between 2001 and 2003.

Prosecutors said Mikus and Cracchiolo overstated the amount of past and projected procedures involving an Endocare manufactured device known as the Cryocare Box, which is used to freeze cancerous tissue for the treatment of prostate cancer.

In connection with a 2001 stock offering, the executives told investors that the company's largest distributor was immediately reselling Cryocare Boxes for medical procedures. However, these devices sat unused and unopened in the company's warehouse, according to prosecutors.

In addition, the two employees told investors, accountants and regulators that some of its Florida-based customers were obligated to pay for these devices, even though they were not.

As a result, Endocare falsely inflated revenue by $4.2 million in November 2001. Three months later, the executives concealed these transactions were falsified when both claimed the company topped revenue forecasts by $500,000.

Allegations of fraud surfaced in 2002 and by January 2003, Endocare was delisted from the stock exchange.

Mikus and Cracchiolo agreed to surrender to federal authorities in late April.