An ongoing federal accounting probe at wireless bar-code device company Symbol Technologies has led to the resignation of its co-founder and chairman of the board, Dr. Jerome Swartz.
The company also said its chief counsel had decided to leave the company.
Monday’s abrupt resignation of Swartz, a company founder who was also its chief scientist, comes as Symbol faces down a federal probe by the Securities and Exchange Commission, as well as the Justice Department, into its past accounting practices.
In a statement announcing his resignation, Swartz said: “It is clear that improper finance and accounting activities occurred at Symbol Technologies during my tenure.” With an internal investigation into Symbol’s accounting issues now complete, he decided to step down, the statement said.
The Holtsville, N.Y.-based Symbol said its Chief Executive Officer Richard Bravman, has taken on the duties of chairman until the next annual meeting of shareholders, scheduled for Oct. 20th when the company plans to elect a new chairman.
However, Swartz, who helped launch Symbol in 1975, is planning to remain a part-time employee as chief scientist emeritus, and will report to Bravman. His main focus will be on technology and intellectual property matters, the company said.
Swartz holds about 150 of Symbol’s patents on various wireless and bar-code-scanning technologies, which Symbol said represent about 20 percent of its total portfolio.
Prior to Swartz’s exit, Symbol’s general counsel and secretary, Leonard H. Goldner, resigned as of last Monday, June 30th, the company said today. But Symbol said it may retain Goldner for a period in order to “provide legal services related to the completion of certain outstanding intellectual property and commercial litigation matters.”
In the meantime, Walter Siegel, deputy general counsel and vice president of law and business development, is serving as interim general counsel while the company looks for a replacement.
Two former company executives have already pleaded guilty to fraud charges related to how the company booked revenues in past years and federal regulators have only said that the probe is ongoing. Both cases involved similar criminal charges of fraud lodged by the U.S. Attorney.
The former executives pleaded guilty to fraud and conspiracy charges related to a scheme to inflate revenues between 1998 through 2002, according to federal regulators. In one case, prosecutors said the then-employee “inflated sales by over $100 million” as part of a “channel stuffing” scheme to inflate Symbol’s earnings.
In a statement, Bravman said the company is “working diligently to resolve as soon as possible those issues emerging from our internal investigation of past accounting practices. The new executive leadership team is committed to ensuring the utmost integrity in its financial reporting and the management of its business.”
Symbol has already said it has delayed filing its 2002 annual report until the second half of July in order to address expected restatements of earnings from its external and internal probes.
