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Star Scientific Subpoenaed by U.S. Attorney's Office

GLENN ALLEN, Va. ( TheStreet) -- It's a crisp January day at the corporate offices of Star Scientific (STSI). A knock is heard on CEO Jonnie Williams' office door.

"Hello, who is it?"

"The U.S. Attorney's office."

"Um... What are you doing here?"

"Serving subpoenas."

"Uh oh."

Star Scientific waited for the last possible day to file its 2012 10-K, which included this newsy nugget:

In late January and February of this year, our company, directors and others received subpoenas from the United States Attorney's Office for the Eastern District of Virginia seeking documents. Our present understanding is that the investigation is principally focused on transactions involving our company's securities including certain private placements and related party transactions since 2006. We are responding to the subpoenas and intend to cooperate fully with the investigation.

In other bad news, sales of Star Scientific's Anatabloc nutritional supplement totaled $2 million in the fourth quarter, a sequential increase of just 14%.

For all of 2012, Star Scientific reported revenue of $6.18 million and a net loss of $22.9 million.

Star Scientific had $23 million in cash as of Dec. 31, which is only sufficient to last for another year.

Conspicuously omitted from Star Scientific's annual report is any mention of Johns Hopkins' involvement in the Anatabloc human thyroiditis study.

Star Scientific shares closed Monday at $1.98.

-- Reported by Adam Feuerstein in Boston.  

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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