[ROMNEY] said yesterday he was a proactive board member who helped to uncover the fraud. He said he and other board members became aware of the problem after another laboratory, in December 1992, was found to have committed fraud through use of a billing system similar to Damon's. Romney said the board used its New York law firm to investigate, and as a result, the board took "corrective action" months before Damon was sold to Corning.
Romney's role in Damon, which had sales of $317 million the last year he was on the board, is potentially more troubling. His profit and Bain's came after Damon's bottom line was boosted by activities that turned out to be fraudulent. Romney says he and other board members acted to change the practices.
It is not clear whether Corning's knowledge of the Damon billing fraud affected the sale price. Corning purchased Damon for $391 million. In 1994, Romney told the Globe that the sale yielded him $103,000 profit. His venture capital firm, Bain Capital, had an 8 percent stake in Damon. Romney also earned a 5 percent share of the Bain profit, or $370,000.
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