Two executives were charged last week with criminal violations in the Southern District of New York relating to Valeant Pharmaceuticals activities. These charges are the first of more to come in an ongoing investigation focusing on Valeant’s corporate demise from a high-flying pharmaceutical company.

I have written before about Valeant’s rotten culture, slavish devotion to quarterly performance, and short-sighted management culture that ultimately bred a culture of criminal conduct.

Gary Tanner, a former Valeant executive, and Andrew Davenport, the former CEO of Phildor Rx services, were arrested and charged with fraud and kickbacks. Philidor is a Pennsylvania specialty pharmacy and exclusive distributor of Valeant products. Tanner had an undisclosed interest in Philidor. Valeant’s relationship with Philidor has always been at the center of the Valeant controversy. Valeant eventually purchased an option for $100 million to acquire Philidor. Subsequently, Philidor was at the center of a $58 million accounting error in Valeant’s books.

Philidor is accused of aggressively promoting sales of Valeant products at higher prices to reach certain sales milestones and collect incentive payments. Eventually, shareholders and other interested parties started to question the relationship between Philidor and Valeant and whether it was an arms-length relationship. Tanner and Davenport used Philidor to collect millions in personal funds without disclosing the nature of their relationships to Valeant.

Valeant’s stock collapsed in 2015 and fell nearly 90 percent in one year. Valeant nearly defaulted on $30 billion in debt it built up during an acquisition spree as part of its aggressive expansion program.

Valeant and several chief executives continue to be under criminal and civil investigation for drug price gouging, accounting practices, financial disclosures, billing practices, kickbacks and bribery and have a myriad of investor lawsuits still pending.

Tanner’s undisclosed interest in Philidor created a real serious conflict that he used to advance his personal interests and jeopardized Valeant’s overall operations. Philidor engaged in questionable sales practices relying on dubious sales practices with pharmacy benefit managers and insurance companies. It is not known whether senior Valeant executives knew about Philidor’s questionable activities and this prosecution may be the first step in seeking cooperation from Tanner and Davenport against senior Valeant executives.

Valeant was the darling of the pharmaceutical industry for years based on its aggressive sales strategy and acquisition of existing companies with drug product portfolios. Valeant attributed its extraordinary growth to a new model that avoided costly research and development programs and instead relied on acquisition of existing drug companies.

Several private equity companies made huge profits with the run up of Valeant stock to a high of around $262 a share. As information was disclosed about Valeant’s problems, starting with Philidor, the company’s position unraveled when more accusations and misconduct were uncovered, especially surrounding price gouging strategies and resistance from pharmacy management programs to huge price increases sought by Valeant. This controversy eventually landed Valeant into a political investigation launched by Congress in response to questionable sales activities.

As more light was shed on Valeant, the picture of gross mismanagement and a culture of expediency and accounting errors was exposed, leading to the fall of its CEO and CFO, who remain under active investigation by Preet Bahara, the US Attorney in the Southern District of New York.