Both founders of a Mobile medical device start-up accused of steering millions of dollars in investor money toward personal spending have told a Mobile County judge they intend to fight the charges — and one of them has signaled he may argue he was not criminally responsible for his conduct.
Attorneys for Peter “Teddy” Falkner and Carla Williams entered not guilty pleas in Mobile County Circuit Court on Sept. 8, 2026. The filings were the first substantive defense response since a grand jury returned indictments accusing the former spouses of misrepresenting their backgrounds to investors and spending money raised to develop fertility devices on what prosecutors describe as “lavish lifestyles.”
Falkner’s plea, signed by Mobile attorney Buzz Jordan, went a step further than a routine denial. It entered a plea of not guilty and “Not Guilty by Reason of Mental Disease or Defect.” Williams, represented by Birmingham attorney Daniel Fortune, filed a standard not guilty plea in a separate document. Both defendants waived their right to appear in person for formal arraignment, a common step that allows counsel to enter a plea on the record without transporting a defendant to the courthouse.
The written pleas do not spell out the condition Falkner is relying on. His attorney, however, told reporters the claim traces to injuries Falkner suffered in a 2024 traffic crash in Tennessee.
What the Indictments Allege
Falkner and Williams each face eight felony counts. According to the charges, those include criminal conspiracy, fraud in the sale of securities, and six counts alleging that the pair either omitted material facts or made misrepresentations to people who put money into the venture.
The company at the center of the case is Innovative Medicine Partners, or IMP, a Mobile-based firm the former couple co-founded with local physicians. Prosecutors say Falkner and Williams helped bring in roughly $10 million in investment for the company, which was formed to develop fertility devices.
The accusations did not begin with the criminal case. They first surfaced publicly in 2022, when IMP investors and business partners sued the couple in civil court. Those filings alleged that about half the money raised went to goods and services that had nothing to do with product development — among them tuition for the couple’s children, household utility bills, restaurant meals, international airfare, hotel stays, concert tickets and more than $60,000 in purchases from Amazon. Court filings also alleged that company money supported Williams’ music career, including roughly $28,000 in travel costs connected to recording sessions at Abbey Road Studios in England.
Falkner and Williams are presumed innocent, and the allegations in the indictment are accusations that the state must prove beyond a reasonable doubt at trial.
Why the Securities Commission Brought the Case
The indictments and arrest warrants were secured last month by the Alabama Securities Commission, the state agency that regulates the sale of investments in Alabama. The commission is not a private watchdog or an arm of the attorney general’s consumer division. It is a standalone state agency, headquartered on Dexter Avenue in Montgomery, with divisions that handle registration of securities dealers and investment advisers, auditing, financial exploitation reporting and enforcement.
The commission describes its core mission as protecting investors from securities fraud and says it pursues enforcement against firms and individuals who violate the Alabama Securities Act. In practice that means the agency does two very different jobs: a licensing and compliance function that most Alabamians never see, and an investigative function that occasionally produces criminal cases like this one. The agency also runs investor education programs, including outreach aimed at military communities.
The legal framework is the Alabama Securities Act, codified at Title 8, Chapter 6 of the Code of Alabama. Section 8-6-17 makes it unlawful, in connection with the offer, sale or purchase of a security, to employ any device, scheme or artifice to defraud; to make an untrue statement of a material fact or to omit a material fact necessary to keep other statements from being misleading; or to engage in any act or practice that operates as a fraud or deceit on another person. That middle category — untrue statements and material omissions — is the theory behind six of the eight counts each defendant faces.
Section 8-6-18 supplies the teeth. A willful violation of Section 8-6-17 is a Class B felony in Alabama. Under the state’s felony sentencing statute, a Class B felony carries a sentencing range of not less than two years and not more than 20 years. Criminal conspiracy is graded one step below the offense that is its object, so a conspiracy aimed at a Class B felony is a Class C felony, punishable by not less than one year and one day and not more than 10 years.
What an Insanity Plea Actually Requires in Alabama
The phrase “not guilty by reason of mental disease or defect” is widely misunderstood, and it is worth setting out precisely what Alabama law requires, because the standard is demanding.
Section 13A-3-1 of the Code of Alabama states that it is an affirmative defense to a prosecution for any crime that, at the time the acts constituting the offense were committed, the defendant, as a result of a severe mental disease or defect, was unable to appreciate the nature and quality or the wrongfulness of his acts. The statute expressly says that a severe mental disease or defect does not include a condition shown only by repeated criminal behavior.
Three features of that standard matter here:
- It is backward-looking. The question is the defendant’s mental state at the time of the alleged conduct, not his condition today.
- It is an affirmative defense, which means the burden does not rest with the prosecution. Section 13A-3-1 places the burden on the defendant to prove insanity by clear and convincing evidence — a standard higher than the preponderance test used in ordinary civil cases, though lower than proof beyond a reasonable doubt.
- It requires an inability to appreciate the nature and quality or wrongfulness of the acts. Evidence of impairment, pain, memory problems or diminished capacity, standing alone, does not satisfy the statute.
In a case built on years of investor solicitations, filings and financial transactions, a defense under Section 13A-3-1 would ordinarily require expert testimony connecting a severe condition to the defendant’s state of mind across the period covered by the indictment.
Competency Is a Separate Question
Insanity is frequently confused with competency to stand trial, but Alabama treats them as distinct inquiries governed by different rules.
Competency is addressed by Rule 11 of the Alabama Rules of Criminal Procedure. Under Rule 11.1, a defendant is mentally incompetent to stand trial if he lacks sufficient present ability to assist in his defense by consulting with counsel with a reasonable degree of rational understanding of the facts. That is a present-tense test about whether the case can proceed at all. A defendant found incompetent is not acquitted; proceedings are typically suspended while treatment is pursued, and the case can resume if competency is restored.
An insanity defense under Section 13A-3-1, by contrast, is litigated at trial and goes to guilt. A defendant may be entirely competent to stand trial today and still argue he was not criminally responsible years ago, or the reverse.
Nothing filed so far indicates the court has been asked to order a competency evaluation.
The Tennessee Crash Behind the Claim
Jordan said the mental fitness claim stems from injuries Falkner sustained in an automobile accident in Tennessee in 2024. Falkner filed a personal injury lawsuit in Nashville last year alleging that he suffered “severe and permanent injuries and permanent disability” after another driver struck his vehicle from behind on May 8, 2024. He is seeking $750,000 in compensatory damages from the driver and the vehicle’s owner.
The civil complaint does not itemize the injuries. Jordan said health care privacy law prevented him from releasing additional detail at this stage. The Davidson County, Tennessee, case file reflects subpoenas issued to chiropractic centers, orthopedic groups and a local physician, and a status conference in that matter is scheduled for December.
The existence of a personal injury suit does not establish a defense under Section 13A-3-1. The civil case and the criminal case ask different questions, apply different burdens of proof and are governed by the law of different states. But the two proceedings can intersect: medical records gathered in the Nashville litigation are the kind of material a defense team would need in order to support an insanity claim in Mobile.
A Fight Over Documents Comes First
Before any of that is tested, the parties have to work through what is shaping up to be a substantial exchange of records.
Securities Commission prosecutor Jacob Howell notified Mobile County Circuit Judge Jay York on Sept. 9 that the state is preparing to hand over a “large volume” of sensitive material gathered during the investigation. According to the filing, that includes bank and financial records, emails, business records, government filings and information involving alleged victims and third parties.
Prosecutors asked the court to make those records available to defense attorneys while keeping them out of public view. The request is a protective order, a routine but consequential tool in white collar prosecutions.
Rule 16.4 of the Alabama Rules of Criminal Procedure gives trial judges broad authority in this area. It provides that a court may at any time order that discovery, examination or inspection be denied, restricted or deferred, or make such other order as is appropriate. In a financial case, that typically means defense lawyers receive the full file — account statements, transfers, correspondence — but are barred from disseminating it outside the defense team, and filings that quote from it may be submitted under seal.
The practical effect for the public is that much of the evidence in a case of significant local interest is likely to remain unavailable until it is introduced in open court.
What Happens Next
With not guilty pleas on the record and arraignment waived, the case moves into its pretrial phase. The court will take up the protective order, the state will produce discovery under whatever conditions the judge imposes, and the defense will have the opportunity to file motions, including any motion connected to Falkner’s mental disease or defect claim.
South Alabama News previously reported on this case on Aug. 17, when Williams sought the court’s permission for international travel while the charges were pending. No trial date has been set.
Investors who believe they have been defrauded in Alabama can contact the Alabama Securities Commission, which maintains a complaint procedure and a toll-free line for the public.