The board of directors of Utah Medical Products named Kevin L. Cornwell president and chief executive officer on Dec. 21 - two days before a federal judge found former president Dean Wallace not guilty of 13 felony charges of insider trading and falsifying documents.
Wallace stepped down as president of Utah Medical Products after a federal grand jury indicted him on 18 counts, including five tax evasion counts.Following a two-week trial, U.S. District Judge David Sam on Dec. 23 found Wallace not guilty of insider trading and falsifying documents. The judge also dismissed the tax evasion counts.
"Wallace is expected to devote his principal efforts to research and development for the company," a prepared statement from Utah Medical Products Inc. said.
Gary Tobian, executive vice president and chief operating officer of Utah Medical, Tuesday said Wallace remains a member of the company's board of directors.
A separate company statement indicates Utah Medical's board of directors has authorized the company to organize a wholly owned subsidiary to "conduct research and development on a contract basis for Utah Medical and other unrelated third-party medical device companies."
Tobian would not comment on Wallace's role in the proposed subsidiary. "Those are discussions going on between him and the board," Tobian said. "He will be involved in the research and development aspect. The exact involvement hasn't been decided yet."
The board named Cornwell to succeed Wallace at a regularly scheduled board meeting, Tobian said.
Wallace did not return telephone messages left at his home.
Dave and Gail Wathen - neighbors and former friends of Wallace and his wife - were the government's chief witnesses against the Wallaces.
The government began investigating Wallace after Gail Wathen contacted the IRS, the Securities Exchange Commission and state securities officials about Wallace's finances, according to testimony at trial.
Defense attorneys portrayed the Wathens at trial as a couple embittered by the Wallaces' success and the 1981 shooting death of their six-year-old son in the Wallaces' home.
In rendering his verdict, Sam said the couples' testimony differed notably.
Paul Moxley, defense attorney for Wallace in the federal court trial, described Wallace as a naive son of immigrant parents raised in an "extremely rural setting."
Wallace holds doctorate and medical degrees, is president of a publicly traded company and holds 18 patents, but he doesn't know enough about business to properly file complicated tax returns, Moxley said.
Meanwhile, Cornwell will assume the role of president and chief executive Dec. 31. He has been president of Adelphi Management Co., a management consulting company based in Menlo Park, Calif., since 1987.
He also was chief operating officer and chief financial officer of Taliq Corp., a subsidiary of Ray-chem Corp. Cornwell is a graduate of Stanford University with a bachelor's degree in chemical engineering and a master's in business administration.
Company officials expect Utah Medical to exceed its goal of a 25 percent increase in earnings per share as compared to 1991 results.