RealTime IT News

Symbol Fraud Charge Spreads; Probe Continues

A former financial executive of Symbol Technologies has pleaded guilty to federal charges of fraudulent accounting while employed by the Holtsville, N.Y.-based wireless technology company.

During a court appearance Thursday, Robert Korkuc became the second former Symbol official to plead guilty to fraud and conspiracy charges related to a scheme to inflate revenues between 1998 through 2002, according to charges lodged by federal regulators.

In March, 44-year-old Robert Asti pleaded guilty to federal charges that he engaged in fraudulent accounting practices that "inflated sales by over $100 million" as part of a "channel stuffing" scheme to inflate Symbol's earnings while he was an employee.

Korkuc resigned from his position as a financial officer with the company in March. In civil charges filed against him this week, the Securities and Exchange Commission charged that "Korkuc and others rigged the results that Symbol reported in press releases and periodic reports filed with the Commission by manipulating millions of dollars in revenue, net income and other measures of financial performance while Korkuc was director of corporate accounting and then chief accounting officer."

During a court appearance Thursday, Robert Korkuc also reportedly admitted that other Symbol executives took part in schemes to manipulate earnings that inflated the revenues of the bar code scanner maker between 1998 and 2002.

The SEC's complaint, which is echoed by the Department of Justice's criminal charges against Korkuc, said Korkuc and others "manipulated reserves and made other improper adjustments to Symbol's raw financial data to conform the reported results to market expectations."

The charges said Korkuc made or oversaw dozens of fraudulent entries on Symbol's accounting records, that boosted net income and otherwise distorted the results by tens of millions of dollars, and were known within the company's executive ranks as "Tango sheets." The sheets, the SEC charges continued, included proposed adjustments to reserves and other items that would eliminate shortfalls and otherwise "enhance" the company's results.

"Korkuc distributed the Tango sheets to members of senior management and then adjusted the raw results according to their instructions," the SEC said, which "lacked proper support and grossly violated generally accepted accounting principles ("GAAP")."

The 40-year-old Korkuc could face up to 15 years in jail and a fine topping $1 million.

Officials involved with the case would only say the investigation into Symbol's accounting practices is continuing.

In a statement Thursday, Richard Bravman, Symbol's vice chairman and chief executive officer, said the action by the SEC is "consistent with the investigations that have been under way by both the SEC and the Department of Justice, as well as our own investigation."

The statement also said, "Symbol continues to work with its auditors to complete a restatement of earlier financial results, and we anticipate the financial impact of this restatement to be consistent with the Company's previous disclosures. The Company continues to cooperate with the ongoing investigations by the SEC and the U.S. Attorney."