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The U.S. Court of Appeals for the Second Circuit on Thursday upheld the convictions of two former executives who engineered a secret kickback scheme to defraud drugmaker Valeant Pharmaceuticals International.

A three-judge panel of the Manhattan-based appeals court said there was "ample evidence" to support the 2018 convictions of Gary Tanner, the ex-Valeant executive, and former Philidor Rx Services CEO Andrew Davenport on four charges, including fraud and conspiracy to commit money laundering.

U.S. District Judge Loretta A. Preska of the Southern District of New York sentenced both men to serve one year and a day and ordered each to forfeit $9.7 million in proceeds from the scheme.

On appeal, attorneys for Tanner and Davenport challenged instructions Preska had given to the jury and argued that the evidence presented to the jury during the four-week trial did not support their convictions.

"Tanner and Davenport insist that their case falls outside 'the paradigmatic cases of bribes and kickbacks,'" U.S. Circuit Judge Raymond Lohier wrote in a 20-page opinion. "Helping Philidor, they suggest, ultimately helped Valeant. We are not persuaded."

The ruling did, however, find that Preska had "abused her discretion" in requiring that $8 million be paid in restitution to Valeant, now known as Bausch Health Cos., and told the judge to come up with a "sound methodology" for determining Valeant's actual losses.

Preska also erred, the panel said, in requiring each defendant to turn over $9.7 million, the total value of the scheme. According to Thursday's ruling, the two defendants were "jointly and severally" liable for that sum and not individually required to pay it.

Lohier was joined in the ruling by Judges Dennis Jacobs and Michael Park.

Prosecutors said the $9.7 million payment to Tanner came from the roughly $50 million that Davenport received in a $133 million deal for Valeant to acquire an option to buy Philidor, a specialty mail-order pharmacy based in Hatboro, Pennsylvania.

According to court documents, Tanner communicated in secret with Davenport, sometimes using an email account in the name of "Brian Wilson," and lied to his firm about trying to seek out other pharmacies that Valeant could use to distribute its drugs.

Prosecutors said the kickback payment to Tanner was laundered through shell company bank accounts under the control of both men in order to hide the arrangement from Valeant. All the while, they said, Tanner advised Davenport in negotiations with Valeant, despite a clear conflict of interest stemming from his position with the company.

"Tanner materially undercut Valeant's ability to diversify its network through specialty pharmacies that competed with Philidor; he secured for Philidor a discount on Valeant products that was not in Valeant's interest; and he advised Davenport on negotiating the terms of the [purchase option agreement]," Lohier wrote in upholding the convictions.

Attorneys for Tanner and Davenport were not immediately available to comment on the ruling.

Tanner was represented by Daniel Volchok, Howard Shapiro and David Lehn of Wilmer Cutler Pickering Hale and Dorr in Washington, D.C., and Brendan McGuire, Matthew Galeotti, Claire Guehenno and Marguerite Colson of the firm's New York office.

Davenport was represented by Alexandra Shapiro and Daniel J. O'Neill of Shapiro Arato Bach in New York.

The case was captioned United States v. Tanner.

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