Shares of wireless bar-code scanning device maker Symbol Technologies
were off by just over 2 percent to $19.29 Wednesday, a day after a former
executive pleaded
guilty to federal fraud charges related to a “channel stuffing” scheme to
inflate the company’s earnings.
In addition, the Securities and Exchange Commission filed civil charges
against 44-year-old Robert Asti that charged the former executive engaged in
fraudulent accounting practices that “inflated sales by over $100 million.”
Trading in the securities had been halted on the news Tuesday that he had
pleaded guilty to the criminal charges and that civil charges had also been
filed against the former Symbol executive.
From mid-1999 until his departure from the Holtsville, N.Y.
company in March 2001, Asti was employed as vice president of sales and finance
for the company’s Americas Sales and Services (TASS) division. On Tuesday,
he pleaded guilty to criminal fraud charges in federal district court.
Eric Corngold, chief of business and securities fraud for the U.S.
Attorney’s Office in the Eastern District of New York, told
internetnews.com that the investigation into Symbol’s accounting
practices is also ongoing. No sentencing date has been set for Asti.
The maximum penalty could be 15 years in prison and fines of $1 million
or possibly up to twice what investors may have lost as a result of Asti’s
actions.
Meantime, in a separate but related action, the SEC on Tuesday filed civil charges
against Asti, charging him with violation of securities laws by “fabricating
over $100 million in sales revenue during Asti’s tenure as head of Symbol’s
‘sales finance’ group, which controlled critical aspects of the revenue
recognition process such as the booking of orders and the issuance of
invoices and credits.”
The SEC complaint alleges that Asti and others in the company shipped
products to customers at the end of each quarter, whether or not they needed
them or planned to sell them, “in order to meet revenue and earnings targets
imposed by Symbol’s president at the time.”
The charges also say Asti and others “engineered phony sales in which
resellers placed large ‘purchase’ orders with the understanding that they
would not have to pay Symbol unless and until they resold the product to the
end user or could return any unsold product at no cost.”
An attorney for Asti was not available for comment.
In a statement Tuesday, Richard Bravman, a vice chairman and chief
executive officer of Symbol, said the action against Asti by the SEC and the U.S.
Attorney’s office “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.”
Symbol said it continues to work with its auditors to complete a
restatement of earlier financial results, and that it expects the “amount
and timing of this restatement to be consistent with the Company’s previous
disclosures.”
Symbol also said it continues to cooperate with the ongoing
investigations by the SEC and the U.S. Attorney.
Last week, Symbol said it may be facing charges and a fine after the SEC issued it a so-called Wells
notice, which gives the company a chance to refute pending charges.
The company said that as part of an ongoing audit of its 2002 revenues,
it discovered that departmental-level accrued expenses were improperly
understated or applied, resulting in a $9 million error on its books.
It also is planning to re-issue financial restatements covering periods
from 1999 through 2002 and it expects to file the restatements by June
instead of by March 31.
