The former chief executive of cosmetics maker Phosphagenics was one of several people who cheated the company of $5.7 million, the company says.
Esra Ogru and one other employee were among those involved in the writing of false invoices to Phosphagenics over the last eight years, an investigation by independent lawyers and accountants brought in by the company has found.
"The company alleges that she is implicated in and has benefited from the misappropriated funds," Phosphagenics said.
Dr Ogru resigned from the company last week, after being stood down by the board on July 1 when accounting irregularities were discovered.
The other employee allegedly involved has also been dismissed.
Phosphagenics has acted to secure the assets of those allegedly involved, and is confident it will recover most of the misappropriated funds.
The company will also seek compensation from each of them for the cost of the investigation, interest, and any other losses incurred as a result of the fraudulent activities.
"The company is confident that it will receive substantial restitution and compensation from the various parties responsible for the misappropriations," executive director Harry Rosen said in a statement.
Phosphagenics makes several anti-ageing and body sculpting products, and is working on creams and patches that could deliver insulin, pain relief, and anti-acne treatments.
Mr Rosen has relocated to Melbourne from the company's New York office to oversee Phosphagenics operations.
He said the company's clinical programs, product development and marketing has not been affected by the internal problems.
"I and my fellow directors cannot aptly describe our profound disappointment in what has occurred," he said.
Phosphagenics shares were up half a cent at 11.5 cents at 1600 AEST.
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