The 1-Day CFO

Lack of Effective Executive Due Diligence and Moderna

Preventative care is used to differentiate between detecting health problems before they develop and diagnostic care, or evaluating someone who has known symptoms. Moderna, the American pharmaceutical and biotechnology giant, most famous for developing one of the COVID-19 vaccinations, could have opted for more effective preventative care in evaluating Jorge Gomez, who came aboard as their new CFO on May 9th. The following day, on May 10th, an SEC filing revealed Gomez’s prior employer Dentsply Sirona Inc. was conducting an internal investigation into possible securities reporting violations. Gomez resigned. He had only served as CFO at Moderna for 1 day.


Jorge Gomez was CFO of Cardinal Health for 13 years before leaving the pharmaceutical company to join Dentsply Sirona, the self-proclaimed world’s largest manufacturer of professional dental technologies and products. He served as Dentsply’s CFO for around 2 and a half years, before Moderna announced on April 11th, that he would be joining them in the same position with a May 9th start date.

Moderna was apparently unaware that the board of directors at Dentsply had received information early in March from current and former employees that alleged incentives to sell products to Dentsply’s distribution partners may not have been “appropriately accounted for” in the last fiscal year’s financial reports, artificially boosting financial results, and, as described in Dentsply’s May 10, 2022 filing “The Audit Committee is also investigating allegations that certain former and current members of senior management directed the company’s use of these incentives and other actions to achieve executive compensation targets in 2021.”

Even though Gomez only worked for a single day, according to Moderna’s 8-K filing, he will receive 12 months’ salary equal to $700,000 and forfeit new equity awards, relocation reimbursements, and a $500,000 signing bonus.  After his departure, Moderna further negotiated claw back payments of the $700,000 severance if Gomez was found to have been involved in misconduct at Dentsply Sirona.

Moderna’s Response and Defense of Their Due Diligence Efforts

It is not hard to draw the connection between Dentsply’s May 10th SEC filing and Jorge Gomez stepping down the same day. Moderna admits they thought it the best course of action. According to a report by EndPoints News, “within an hour of learning about the probe, Moderna CEO Stéphane Bancel met with the company’s chief legal officer, chairman of the board, and external counsel to discuss and schedule a meeting with the full board.” A Moderna spokesperson said, it was determined “…appropriate to separate Mr. Gomez from Moderna” and “Mr. Gomez was immediately informed of that decision.”

While acting quickly after Dentsply’s filing went public, they were equally quick to defend their questionable attention to due diligence. The Moderna spokesperson said to EndPoints News

“The May 11, 2022 announcement and departure of Jorge Gomez from Moderna strongly reflects the seriousness with which Moderna takes corporate governance. We are confident that Moderna conducted all appropriate due diligence on this matter prior to the hiring of Mr. Gomez, based on available information.”

Moderna co-founder and current board chairman, Noubar Afeyan told the Financial Times legal constraints prevented the company from learning about Dentsply’s internal investigation earlier. Afeyan further said: “Both the process of recruiting and vetting, and the process with which we reacted to the new facts that came out, were completely appropriate. I can’t think of a different approach that we could have used under those circumstances.” 

The Need for Quality Due Diligence

In spite of Moderna’s claims that they did sufficient and “appropriate” due diligence, it begs the question why did they not uncover any red flags? What kind of due diligence investigations did they conduct? Did they default to a routine pre-employment background check and reference interviews? Who oversaw these due diligence measures? What were their qualifications?

Perhaps Mr. Afeyan “can’t think of a different approach” in due diligence because he is unaware that there are different levels of due diligence. Many companies simply conduct standard background checks. These background checks are not sufficient due diligence at all, particularly when hiring C-suite executives.

Standard background checks usually look at only 4 or 5 components, including verification of education and employment history, and criminal history. Routine background checks only give a very small snapshot of public information and fail to capture substantial amounts of detail, particularly hidden or undisclosed information. Routine background checks are completely insufficient when evaluating a new executive hire or board member. They are unsuccessful at taking a comprehensive look into an executive’s involvement in other business entities, lawsuits, reputation, behavioral history, and other risk exposures.

Executive background checks, or “deep-dive” due diligence, should always be conducted when hiring executives and board members. Tier 3 due diligence looks at more than 25 types of public records and Open Source Intelligence (highly specialized intelligence and deep web searches).  This is combined with in-depth review of media and news sources.

Some examples of issues that in-depth due diligence can uncover that would not be found in a standard background check include: Different alias names, con artists and fraudsters, misrepresentation and misconduct at prior jobs, damaged business reputation, SEC violations, breach of contract history, history of sexual harassment, fraud, money laundering, embezzlement, bribery, interstate bankruptcy, intellectual property theft, manslaughter, and murder. This list highlights a few of the issues that can be found. Improper business relationships, inappropriate behavior, and working with sanctioned governments may also be detected. 

The majority of background screening companies do not know how to conduct effective due diligence investigations, and human resource departments do not have the expertise or ability to conduct them internally in most corporations. Deep dive due diligence requires the expertise of investigators with extensive knowledge and experience required to investigate, analyze, and compile information from numerous sources, cross-reference the data, and be able to present not only the facts, but assess trends  and risk exposures.

Due diligence on executives and employees is not a one and done. It is something that should be periodically repeated as determined by a particular company’s industry, business sector, and other risk factors. It should be noted that Dentsply had prior issues with executives and board members.

Preventative Care

Information of potential wrong doings within the company was known to Dentsply’s board since early March, various employees and ex-employees had come forward with their concerns. Information was available, if not public.  On April 16th, the board hired replacements for Casey and Gomez. On April 19, the board announced Casey’s abrupt departure without giving a reason. Gomez last day was scheduled for May 6th. These matters alone are red flags and was information that skilled investigators could have uncovered. 

Dentsply had prior dealings with the SEC and Casey was not the first CEO to leave abruptly. In September 2017, then CEO-Jeffrey Slovin suddenly resigned along with Chief Operation Officer Christopher Clark and Executive Chairman Bret Wise. The announcements of their departures “came just six weeks after the company acknowledged the SEC’s Division of Enforcement had asked the company ‘to provide documents and information concerning the company’s accounting and disclosures, including its accounting and disclosures relating to transactions with a significant distributor of the company,’” according to the Charlotte Business Journal

In December 2020, Dentsply agreed to a “cease-and desist from violations [without admission or denial] of the charged provisions [of the 1934 Securities Exchange Act] and to pay a $1 million civil penalty. It seems evident that due diligence was also not conducted by Dentsply on its executives and board.

Regardless of the outcome of the current internal investigation by Dentsply and their cooperation with the SEC, Moderna could have benefited from better preventative care, and certainly from  due diligence investigation prior to the hiring of Jorge Gomez. 

Information surrounding Dentsply’s internal happenings was available. Instead, it wasn’t until the symptom: Dentsply’s internal investigation into alleged malfeasance became public, that the diagnostic became apparent.  This due diligence failure cost Moderna $700,000 and a significant drop in stock prices, not to mention recruitment fees to replace the new CFO, reputation damage that will last for years, and a likely shareholder lawsuit in the future. 

It is very telling that Moderna’s spokesperson’s claimed that they “are confident that Moderna conducted all appropriate due diligence on this matter prior to the hiring of Mr. Gomez, based on available information.”  After all, risk mitigation can only occur if the risks are identified in the first place.


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