4 June 2004 Eight former executives of Symbol Technologies face criminal charges for their roles in an accounting scandal that one federal prosecutor has described as “breathtaking in its scope”.
Federal prosecutors say that Symbol, a key supplier of wireless LAN equipment to the enterprise sector, inflated revenue by $230 million from 1999-2002.
Symbol, whose customers include Wal-Mart, FedEx and various arms of the US government, has settled criminal charges and agreed to pay $139 million in cash and shares to a number of private shareholders who had sued the New York-listed company for artificially inflating its share price.
As part of the settlement, Symbol acknowledged responsibility for the misconduct of certain former employees and agreed to co-operate with the US government’s ongoing investigation.
But eight former executives of the company still face heavy fines or up to 20 years in prison for their role in the scandal.
The eight include the former president and CEO, Tomo Razmilovic, former chief financial officer Kenneth Jaeggi and the former general counsel, Leonard Goldner.
A statement issued by the office of the US attorney of the Eastern District of New York, which is bringing the prosecution, claims the executives made use of a “stunning array of fraudulent accounting manipulations” in order to hit their sales targets, for which they were generously rewarded.
These fraudulent practices included the recording of false sales, premature revenue recognition, channel stuffing and improper expensing, the US attorney alleged.
“This was a veritable playbook of corporate fraud,” said US attorney Roslynn Mauskopf, a member of President Bush’s corporate fraud task force. “They cooked the books every which way they could. It was breathtaking in its scope.”
Symbol’s current president and CEO, William Nuti, sought to draw a line under the affair.
“Symbol has worked tirelessly during the past two years to resolve problems created by the company’s former management,” he said. “We have now succeeded in putting the vast majority of our problems behind us and have taken this opportunity to put in place a dramatically improved corporate governance structure.”
