To print: Click here or Select File and then Print from your browser's menu

This story was printed from silicon.com, located at http://www.silicon.com/

Story URL: http://management.silicon.com/government/0,39024677,39166273,00.htm

Ex-Gateway CFO found liable in SEC fraud case
Along with former controller...

By Reuters

Published: Friday 09 March 2007

Computer maker Gateway's former finance chief and controller have been found liable on civil charges that they manipulated financial results to meet Wall Street expectations in 2000, according to the US Securities and Exchange Commission (SEC).

The verdicts against former Gateway chief financial officer John J Todd and former controller Robert D Manza were announced by a federal jury in San Diego following a three-week trial, the SEC said.

They were found liable of violating SEC provisions relating to fraud, false statements to accountants, and record-keeping.

Former Gateway chief executive, Jeffrey Weitzen, in May won dismissal of a similar SEC lawsuit accusing him of inflating revenue to meet analysts' expectations in 2000.

A judge will determine sanctions against Manza and Todd later, the SEC said.

Attorneys for Manza and Todd could not immediately be reached for comment.

The SEC charged that Todd devised a scheme to "close the gap" between analysts' expectations and Gateway's anticipated revenue. Starting in March 2000, Todd inflated revenue by offering pre-approved financing to people whose previous credit applications had been rejected by Gateway, the SEC said.

The scheme continued into the third quarter of 2000 with even riskier credit applicants, regulators said. Manza was accused of initiating one of the improper revenue-inflating transactions and preparing financial statements, knowing that the transactions failed to comply with accounting rules.