Former Silicon Valley execs indicted in federal probe
Reuters Story - September 10, 1998 22:05
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SAN FRANCISCO, Sept 10 (Reuters) - A federal grand jury indicted two former officers of a multimedia computer products firm in what has been described as the largest financial fraud case ever seen in Silicon Valley, officials said Thursday.
Paul Jain amd Steven Allan, the respective former chief executive officer and chief financial officer of Media Vision Technology Inc. of Fremont, Calif., were indicted after a four-year probe by the FBI and the U.S. Attorney's office.
Robert Mueller, U.S. Attorney for the northern district of California, said Jain and Allan were charged with mail, wire and bank fraud, insider trading, money laundering and making false statements to the U.S. Securities and Exchange Commission and to the firm's accountants.
The indictment said the two former executives participated in or directed other employees to engage in fraudulent transactions intended to falsely inflate Media Vision's revenues and profits in 1993. Media Vision filed a Chapter 11 proceeding in December 1994, was reorganized and is now known as Aureal Semiconductor Inc .
Jain and Allan allegedly created false sales and inventory, hid millions of dollars in returned product, recorded shipments as sales before the products were shipped and misrepresented Media Vision's expenses, the indictment said.
The indictment came almost two months after the SEC sued Jain, Allan and two former Media Vision executives, accusing them of financial reporting fraud and insider trading. When the SEC's lawsuit was filed in July, David Bayless, administrator of the commission's district office in San Francisco, called it the largest financial fraud case that his office had seen in Silicon Valley.
Darryl Rains, an attorney representing Allan in the SEC case, was not immediately available for comment.
Jain and Allan could face multiple years in prison and hefty fines if convicted of each of counts in the indictment, including up to 10 years in prison and a potential $1 million fine if found guilty of making false statements to accountants. The SEC and the U.S. attorney for the Northern District of California previously brought settled civil and criminal actions against Media Vision's former chief operating officer Russell Faust and senior vice president Michael Humphress. |
