by Ken Alltucker - Jun. 6, 2009 12:00 AM The Arizona Republic
A Scottsdale biotechnology company settled a lawsuit with its former CEO and another executive over allegations that the pair used corporate credit cards to pay for $450,000 in personal expenses and improperly obtained computer files.
InNexus Biotechnology sued its founder and former CEO Alton Charles Morgan and Vice President Gail Thurston. Morgan's son, David Morgan, a former technology-management contractor for the company, also was named in Maricopa County Superior Court lawsuit. The two sides settled the suit May 29 and have 60 days to complete the undisclosed terms of the settlement.
Alton Charles Morgan and Thurston could not be reached. InNexus CEO Jeff Morhet did not return calls.
Morgan now serves as chief executive officer and Thurston is vice president of corporate and business development for Scottsdale-based biotech company Apthera.
InNexus Biotechnology, a drug-development company, relocated its executive offices to Mayo Clinic's Scottsdale campus in 2006. The company's headquarters remain in Vancouver, British Columbia, and its stock is publicly traded in Canada and on the Over-The-Counter Bulletin Board.
Morgan, a biotech-industry veteran, founded InNexus and served as its chief executive from mid-2003 until 2006 when he was removed from the company's top position, according to court documents.
Morhet took over the company's top executive position in 2006.
InNexus alleged in the lawsuit that both Morgan and Thurston used the company's corporate credit cards and other InNexus funds to purchase an estimated $450,000 in personal items. Yet both Morgan and Thurston said in court documents that the company knew about their use of corporate credit cards for personal purchases and that the company was reimbursed for such charges.
InNexus also alleged that Morgan and his son accessed confidential information from the company's e-mail software program and other databases. Morgan and his son denied improperly accessing the computer systems.
Court documents filed by attorneys representing Morgan suggest that the relationship between Morgan, Morhet and the company deteriorated after Morgan was removed as the company's top executive.
Morgan also has sued InNexus in a Canadian court, alleging the company failed to pay him for his consulting services to the company. Three lawsuits over related issues are also pending in Canadian courts, according to documents filed in the Maricopa County case.
Over the past three years, Morhet has become a well-known figure in the Phoenix area's biotech circles, helping organize the launch of a biotech-networking group called ThirdBiotech and winning the Arizona Technology Council's business leader of the year award in 2008.
InNexus' shares on the OTC Bulletin Board have largely traded below 10 cents in recent months. Its shares closed Friday at 8.5 cents, up one penny.