August 29, 2014

Commitment to Document the Journey through Federal Prison

August 29^th marked the end of one journey and the beginning of another. On that day, I was sentenced to 60 months in a Federal Prison Camp. I remain free on bond until I self surrender – probably to the minimum security camp at Taft, California. For those of you who have shared in my journey and given me your love and support over the past few years, I am deeply and forever grateful. And I will continue to count on you as I embark on this next phase of my journey.

For those of you to whom this comes as a surprise and perhaps even a shock, I apologize for not being more forthcoming. I am blessed to have many wonderful friends, relatives and colleagues. You are all important to me. Since being indicted on multiple counts of securities, wire and mail fraud on August 22, 2012 and subsequently arrested by the FBI, my life has been turned upside down as you might expect. In order to continue moving forward and accomplishing positive things in my life, it was necessary for me to compartmentalize all of the negative things going on in my life as much as possible. Explaining my situation to people was emotionally exhausting and every time I did this, it was like reliving the experience all over again. At a point, I just could not do it anymore.

The almost universal reaction has been disbelief. How could the David Applegate I know get caught up in something like this? Well I did and I take full responsibility and I will be paying for it for the rest of my life. Without going into too much mind numbing detail, what I did – along with others – was cause millions of dollars of product to be shipped to a key distributor beyond what they needed to conduct their business in order to meet my sales projections and meet the expectations of Wall Street. This is commonly referred to as “channel stuffing” and it is illegal.

On May 9, 2013, I pled guilty to one count of conspiracy to commit wire, mail, and securities fraud and one count of false statements, both of which are felonies. I first want to acknowledge the seriousness of the crimes I committed and pled guilty to. I take full responsibility for my role in the fraud that occurred. I am deeply sorry for the pain I have caused my husband and life partner of 30 years and the enormous disruption to our lives my actions have caused. I am sorry for the pain and sorrow I have caused my mom who still does not understand how the son she raised could be responsible for what I did.

And I am truly sorry for the role my actions played in the shutting down of the Spine Business Unit at ArthroCare. As a result, many people I cared about and respected lost their jobs. Until today, I have not been able to let them know how sorry I am for this. After today, I will be glad that I can contact those people and make amends in any way I can.

Those of you who know me know that I am a boundless optimist who always tries to find the good in a situation and the best in the people I meet. I also have a personal philosophy that is best described as “living in the moment.” These philosophies have allowed me to continue to prosper and contribute even as I have had to face extremely difficult and stressful situations.   In many of these situations, I have been powerless but instead of focusing on the negative I cannot change, I have chosen to focus on the positive impact I can continue to have. And the thing I am most grateful for in this area is the opportunity I was given by the company I worked and consulted for over the past 5-1/2 years. After being terminated by ArthroCare at the end of 2008 at a time when no one would offer me full time employment, they took a chance on me. Being able to contribute alongside such amazingly talented and hard working people has been a life changing opportunity for me. They stuck by me and I am forever in their debt.

Good things often come out of bad situations and I have been amazed by the outpouring of love and support I have received from friends, relatives and colleagues. As I have travelled this difficult path over the past few years, I have felt this support and love literally lifting me up when I most needed it. And at the center of that is the love of my life, my Mr. Ken. He does not deserve what I have put him through and yet, he has only loved me more. Without that, I would be lost.

As I move forward into this next phase, I plan on continuing to look for the best in every situation I encounter while (hopefully) at Taft Camp. Those of you who know me well know that I love to mentor and help others in any way I can. I will be looking for opportunities to do that during my incarceration. I also plan on continuing to write as I go through this journey and I hope you will follow me – and maybe even write or come and visit me if you are ever in the Central Valley.

David Applegate

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