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AAC under investigation for possible fraud

March 4, 2015
by Julie Miller, Editor in Chief
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According to wire reports, legal experts are investigating possible violations of federal securities laws by officers and directors of American Addiction Center’s AAC Holdings, Inc. (AAC).

The investigation concerns whether an AAC director and its CEO Michael Cartwright violated Sections 10(b) and 20(a) of the Securities Exchange Act. Allegedly, AAC inflated its revenues and margins by conducting medically unnecessary urine testing. An article published March 3 on Seeking Alpha, an investment research website, and written by Bleecker Street, which is short AAC's stock, points out that the testing was conducted more frequently than the industry standard practice and was highly profitable—accounting for about 25 percent of the company’s revenue.

The article also alleges that AAC boosted its net income by inappropriately changing the methodology by which it calculates its provision for doubtful accounts receivable. 

Investigators will seek to determine whether shareholders were harmed as the Seeking Alpha author claims.

Shares of AAC fell $3.54 per share to $30.73, in intraday trading on March 3. Current prices can be found here.

According to the wire reports, persons with relevant information and AAC shareholders may contact Jim Baker of Johnson & Weaver, LLP,  at jimb@johnsonandweaver.com or by phone at 619-814-4471; or contact Robert S. Willoughby at Pomerantz LLP at rswilloughby@pomlaw.com or by phone at 888-476-6529, ext. 237