FILED IN CHAMBERS U.S.D.C. Atlanta

DEC 0 2 2014 IN THE UNITED STATES DISTRICT COURT I'l. Hl-i--; 1:.:'\,

FOR THE NORTHERN DISTRICT OF GEORGIA By: NEWNAN DIVISION

UNITED STATES OF AMERICA

Criminal Indictmentv.

THOMAS D. MELVIN, C. ROAN BERRY, MICHAEL S. CAIN, AND JOEL C. JINKS

THE GRAND JURY CHARGES THAT:

COUNTS ONE through SEVEN

Securities Fraud (18 U.S.C. §§ 1348 and 2)

1. From on or about December 4,2009, and continuing through on or about

January 14,2010, in the Northern District of Georgia and elsewhere, Defendants

THOMAS D. MELVIN, C. ROAN BERRY, MICHAEL S. CAIN, and JOEL C.

JINKS, and PERSON A, aided and abetted by each other, did knowingly and

willfully execute and attempt to execute a scheme and artifice (1) to defraud

other persons in connection with stock securities of Chattem, Inc. and (2) to

obtain, by means of false and fraudulent pretenses, representations, and

promises, money and property in connection with the purchase and sale of stock

securities of Chattem, Inc., an issuer with a class of securities registered under

Section 12 of the Securities Exchange Act of 1934 ("the Exchange Act") (15 U.s.C.

Case 3:14-cr-00022-UNA Document 1 Filed 12/02/14 Page 1 of 9

§ 781) and that was required to file reports under Section 15( d) of the Exchange

Act.

BACKGROUND

2. At all times relevant to this Indictment:

a. Chattem, Inc. ("Chattem") was an over-the-counter pharmaceutical

manufacturer headquartered in Chattanooga, Tennessee. Chattem was a public

company whose stock traded on the NASDAQ Stock Market ("NASDAQ")

under the ticker symbol"CHTT." Chattem's securities were registered with the

United States Securities and Exchange Commission ("SEC") pursuant to Section

12(b) of the Exchange Act, and the Company was required to file reports with the

SEC pursuant to Section 15( d) of the Exchange Act.

b. Sanofi-Aventis ("Sanofi") was a French pharmaceutical company

that manufactured and marketed prescription and over-the-counter medication.

Sanofi traded American depository shares on the New York Stock Exchange

under the symbol "SNY."

c. In or about late 2009, Chattem entered discussions with Sanofi

regarding a potential acquisition of Chattem. In or about November 2009,

Chattem had a series of confidential board of directors meetings in which

Sanofi's proposed acquisition of Chattem at a price of above $90 per share was

discussed, and Chattem agreed to proceed with due diligence. The directors who

served on Chattem's board had an obligation to maintain the confidentiality of

information received in connection with their service as directors.

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d. Defendant THOMAS D. MELVIN was a certified public accountant

licensed in Georgia and partner in the accounting firm Melvin, Rooks, & Howell

("MRH") in Griffin, Georgia. In his capacity as an accountant, MELVIN regularly

received confidential information from clients. The Georgia State Board of

Accountancy prohibits licensees from disclosing confidential information

obtained in the course of performing professional services without client consent.

e. One of MELVIN's clients was a board member of Chattem who was

present in the Novernber 2009 board meetings in which Sanofi's proposed

acquisition was discussed.

f. On or about December 4, 2009, MELVIN met with the board

member, during which the board member provided confidential information

about the merger, including the approximate timing of the deal and information

from which the likely acquisition price was apparent, to MELVIN for purposes of

obtaining personal tax advice. The board member told NIELVIN that the

information discussed during their meeting was confidential.

g. On December 21, 2009, Sanofi publicly announced that it was

acquiring Chattem in a $1.9 billion cash deal. Chattem's stock rose from $69.98

per share at closing on December 20, 2009, to $93.50 per share. at closing the next

day, which was approximately a 33% increase.

h. MELVIN served as the personal accountant for Defendants C.

ROAN BERRY, NnCHAEL S. CAIN, and JOEL C. JINKS.

i. Defendant BERRY lived in Griffin, Georgia and owned a small

business, E.E.S.I. MELVIN served as BERRY's accountant for both personal tax

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services and accounting services for E.E.S.I., and BERRY and MELVIN

maintained a close personal friendship. Defendant BERRY maintained a

brokerage account at Wells Fargo Advisors, LLC ("Wells Fargo") in the name of

his company, E.E.S.I.

j. Defendant CAIN lived in Griffin, Georgia and was a senior vice

president at Morgan Stanley Smith Barney ("Morgan Stanley"). In connection

with his duties at Morgan Stanley, CAIN was a securities broker who traded

securities on behalf of clients and on his own behalf. MELVIN served as CAIN's

accountant for personal tax services, CAIN and MEL VIN referred clients to each

other, and CAIN managed MRH's retirement accounts. Defendant CAIN

maintained a brokerage account for personal securities trading at Morgan

Stanley Smith Barney ("Morgan Stanley") in his own name.

k. Defendant JINKS lived in Griffin, Georgia and was a small business

owner. MEL VIN served as JINKS's accountant for both personal tax services and

for JINKS's business, and JINKS and MEL VIN maintained a close personal

friendship. On or about November 20, 2009, Defendant JINKS opened a

brokerage account at Wells Fargo in his own name and in his wife's name.

1. PERSON A worked at the accounting firm MRH in Griffin, Georgia

with Defendant MELVIN. PERSON A's father-in-law maintained a brokerage

account for personal securities trading at Pershing, LLC, in his own name and in

the name of a family member.

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DEFENDANTS' SCHEME TO DEFRAUD

3. MELVIN misappropriated material, nonpublic information ("Inside

Information") regarding Sanofi's planned acquisition of Chattem in advance of

the public merger announcement in violation of (1) the duties of trust and

confidence that licensed accountants owe to clients under the Georgia State

Board of Accountancy Code of Professional Conduct, (2) expectations of

confidentiality held by his client, and (3) his client's express request that the

Inside Information shared with MELVIN remain confidentiaL

4. MELVIN disclosed the Inside Information to BERRY, CAIN, JINKS, and

PERSON A for his own personal benefit and in violation of duties of trust and

confidence, with the understanding that the Inside Information would be used

for the purpose of purchasing or selling securities.

5. Defendants BERRY, CAIN, and JINKS, and PERSON A, aided and abetted

by Defendant MELVIN, carried out the scheme and artifice to defraud by

misappropriating Inside Information of Chattem's, knowing that it had been

disclosed by MELVIN in violation of duties of trust and confidence that NIELVIN

owed to his clients, so that BERRY, CAIN, JINKS, and PERSON A could execute

and cause the execution of securities transactions on the basis of the Inside

Information.

6. Defendants BERRY, CAIN, and JINKS, and PERSON A, in tum executed

and caused to execute transactions in Chattem's securities on the basis of the

Inside Information provided by Defendant MELVIN for their own benefit

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through personal online brokerage accounts. Defendants BERRY, CAIN, and

JINKS, and PERSON A, sold their Chattem shares after the merger was publicly

announced, thereby earning illegal profits.

EXECUTION OF DEFENDANTS' SCHEME TO DEFRAUD

7. On or about December 4,2009, shortly after his client meeting with the

Chattem board member, MELVIN called Defendants BERRY, CAIN, and JINKS

within an hour of each other. MELVIN exchanged multiple calls with Defendants

BERRY, CAIN, and JINKS between on or about December 4, 2009 and on or

about December 21, 2009, the day that Sanofi's acquisition of Chattem was

publicly announced. Following the initial conversations with MELVIN,

Defendants BERRY, CAIN, and JINKS purchased Chattem stock.

8. On or about December 7, 2009, MELVIN told PERSON A that a client gave

him Inside Information about the potential acquisition of Chattem, including that

the merger would occur before the end of 2009 and that Chattem's stock would

rise approximately $20-25 per share. Following MELVIN's conversation with

him, PERSON A asked his father-in-law to purchase Chattem stock for him or on

his behalf.

9. On or about the dates identified in Column C of the chart set forth below,

each date constituting a separate count as set forth in Column A, in the Northern

District of Georgia and elsewhere, for the purpose of executing and attempting to

execute the aforementioned scheme and artifice to defraud, and to obtain money

and property by means of false and fraudulent pretenses, representations, and

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promises, the defendants identified in Column B, aided and abetted by each

other and others, executed and caused to execute the securities transactions set

forth in Column D on the basis of Inside Information that they obtained from

Defendant MELVIN:

D Count

B CA Transaction (Amount DateDefendants I

A;Q;Qroximate)(On or About)

Purchase of shares of Chattem common stock in Pershing

LLC brokerage account for or on behalf of PERSON A

TWO

MELVIN I December 10, 2009ONE

Purchase of shares of Chattem MELVIN

December 7, 2009BERRY & common stock in Wells Fargo brokerage account in the name

of E.E.5J. THREE Purchase of shares of Chattem

MELVIN CAIN & December 4, 2009

common stock in Morgan Stanley brokerage account in

CAIN's name FOUR CAIN & Purchase of shares of Chattem !December 7, 2009I

MELVIN common stock in Morgan Stanley brokerage account in

CAIN's nameI FIVE CAIN & Purchase of shares of Chattem

MELVIN December 11, 2009

common stock in Morgan Stanley brokerage account in

CAIN's name SIX CAIN & Purchase of shares of Chattem December 15, 2009

MELVIN common stock in Morgan Stanley brokerage account in

CAIN's name SEVEN JINKS & December 11, 2009 Purchase of shares of Chattem

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l MELVIN common stock in Wells Fargo I brokerage account in JINKS's

name

All in violation of Title 18, United States Code, Sections 1348 and 2.

FORFEITURE PROVISION

Upon conviction of one or more of the offenses alleged in Counts One

through Seven of this Indictment, the defendants, NIELVIN, BERRY, CAIN, and

JINKS, shall forfeit to the United States pursuant to Title 18, United States Code,

Section 981(a)(1)(C) and Title 28, United States Code, Section 2461(c), any

property constituting or derived from proceeds obtained directly or indirectly as

a result of said violations.

If any of the above-described forfeitable property, as a result of any act or

omission of the defendant(s):

(a) cannot be located upon the exercise of due diligence;

(b) has been transferred or sold to, or deposited with, a third party;

(c) has been placed beyond the jurisdiction of the court;

(d) has been substantially diminished in value; or

(e) has been commingled with other property that cannot be divided without

difficul ty;

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it is the intent of the United States, pursuant to Title 21, United States Code,

Section 853(p) as incorporated by Title 18, United States Code, Section 982(b), to

seek forfeiture of any other property of said defendant(s) up to the value of the

forfeitable property described above.

A BILL

SALLY QlTILLIAN YATES

NATHAN P. KITCHENS Assistant United States Attorney

Ge No. 263930 v DOUGLAS?GILFI

Assistant States Attorney Georgia Bar No. 294713

600 U.5. Courthouse 75 Spring Street, S.W. Atlanta, GA 30303 404-581-6000; Fax: 404-581-6181

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