Investigation reveals troubled financial history for PRACS research company

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by KMOV.com Staff

KMOV.com

Posted on March 21, 2013 at 5:10 PM

Updated Thursday, Mar 21 at 5:28 PM

(KMOV.com) -- Following the abrupt closure of PRACS Institute, a Fargo-based biomedical research organization, hundreds were out of work.

Additionally, study participants who were promised financial compensation for their work were told to leave and left wondering about their payment.

An investigation into the company’s history found a long trail of problems, including massive debt. 

PRACS filed for bankrupty in 2012, claiming liabilities of $100 million to $500 billion. That crippling debt was sparked by a scandal that sources say drove away business, and may have finally forced the company to shut down.

Longtime Clinical Research Coordinator in Fargo, Beth Anderson,  it was a cold goodbye.

“They just pulled the plug, yeah,” she said.  Anderson says the company’s investors were no longer willing to lose money on the financially troubled company.

Sources say the financial problems began when a scandal erupted in July of  2011, when the Food and Drug Administration sent one of PRACS’ companies a warning letter alledging misconduct and falsified laoratory records at a research center in Texas.

The FDA also claimed the company’s internal investigation was insufficient. Although the company insisted its studies were still credible, sources say the scandal cost the company business and made it impossible for it to pay off its debts. 

Just eight months after the FDA released its findings, PRACS filed for Chapter 11 bankruptcy, still hoping to restructure the company and survive.

In all, 20 businesses, including the operations in the St. Louis area, were part of the bankruptcy. A few months ago, the corporation reached a settlement with investors that allowed it to stay afloat, but it  appears the investors felt like there was no hope for a significant turnaround, and that’s why the business was shut down.

We made repeated attempts to interview PRACS, its investors and the advisors who tried to help restructure the business, but they declined to comment for our story.       

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