Computer Horizons Chief Indicted for Insider Trade
By Gail Appleson and Caroline Humer
NEW YORK (Reuters) - Technology services company Computer Horizons Corp.'s (CHRZ.O) top executive John Cassese was indicted on Thursday on charges of insider trading in shares of a competitor, U.S. officials said.
Cassese resigned as chairman and has taken a leave of absence from the posts of chief executive officer and president, Mountain Lakes, New Jersey-based Computer Horizons said in a statement.
The indictment, unsealed in U.S. District Court in Manhattan, charged Cassese with fraud and insider trading. It said the executive had acted "unlawfully, willfully and knowingly, directly and indirectly" in trading 15,000 shares of a rival technology services company called Data Processing Resources Corp.
According to the indictment, Cassese learned from Compuware Corp. (CPWR.O) that it planned to buy Data Processing Resources. He had been negotiating with Compuware on its potential purchase of Computer Horizons.
The government alleged that Cassese in June 1999 used that information as the basis for purchasing shares of Data Processing Resources. The Compuware/Data Processing deal was announced two days after he bought the shares, and Cassese then sold them for a profit of $150,927, the indictment alleged.
Cassese appeared before U.S. Magistrate Judge Andrew Peck in Manhattan Federal Court on Thursday afternoon and was released on a $500,000 personal recognizance bond.
His lawyer David Brodsky told reporters after the hearing that his client plans to plead not guilty and has taken a leave of absence to devote his attention to his defense. Cassese did not speak to reporters.
"John will rely on justice being done in this case and looks forward to his acquittal of these charges," Brodsky said. A pre-trial hearing was set for Monday afternoon.
Cassese's resignation comes about a year after he agreed to pay more than $300,000 to settle insider-trading allegations by the Securities and Exchange Commission related to the same transaction. In that settlement, he neither admitted nor denied any wrongdoing.
The company said Cassese decided to step down after learning that the Justice Department had obtained an indictment. The company first disclosed the inquiry by the U.S. Attorney's office in September.
Chief Financial Officer William Murphy was named acting president and CEO of Computer Horizons. Computer Horizons board member Thomas Berry was named chairman. Michael Shea, currently controller, was named acting CFO.
Computer Horizons shares fell 15 cents, or 5.28 percent, to $2.69 on Nasdaq. (Additional reporting by Gail Appleson)
03/13/03 16:44 ET |
