Paul,
I stand corrected about Pinez of Centennial Technologies fame. Apparently he's plead guilty and sentencing is set for 5/17. I lost a lot of money but learned a lot. In addition to the normal 2 cents on the dollar settlement, I also received some of the stock which has actually gone up the past few months. Centennial is now involved with manufacturing flash memory cards and apparently is shipping product as opposed to empty boxes which got Mr. Pinez in trouble. It's an interesting story for those that aren't familiar with it:
The former Chief Executive Officer of Centennial Technologies, Inc. pled guilty today in federal court to
conspiring to commit securities fraud.
United States Attorney Donald K. Stern and Barry W. Mawn, Special Agent in Charge of the New England Field Office of the Federal Bureau of Investigation,announced today that EMANUEL PINEZ, age 61, formerly of Burlington and Beverly, Massachusetts, pled guilty before U.S. District Court Judge Joseph L. Tauro to the crime of conspiracy to commit securities fraud.
PINEZ, the former Chairman and Chief Executive Officer of Centennial Technologies, Inc. ("Centennial"), pled guilty to charges of spearheading a scheme to defraud investors by falsely inflating the company's financial results over a two and a half year period from 1994 to 1997. PINEZ was arrested in February 1997, and for the last three years has been incarcerated pending resolution of the case. Two other former Centennial employees, former Chief Financial Officer James Murphy and Bond D. Fletcher, previously pled guilty to
conspiracy and securities fraud charges in the case, and in July 1999, Robert Lockwood was convicted after a jury trial of conspiring with PINEZ, Murphy, and others. All are awaiting sentencing before Judge Tauro.
U.S. Attorney Stern stated: "Emanuel Pinez was the mastermind of this scheme to cook the books at Centennial, a publicly traded company. He directed an extremely sophisticated fraud on the investing public, transforming his company's stock into one of the hottest on Wall Street in 1996. Investors lost hundreds of millions of dollars when the fraud was discovered. Conduct like Pinez's profoundly undermines public confidence in the securities markets, and we will aggressively prosecute those who file false financial information to defraud investors. I also wish to thank the Securities and Exchange Commission
for its extensive cooperation with this investigation."
At the hearing before Judge Joseph L. Tauro today, an Assistant U.S. Attorney stated that at trial, the government would have proved that PINEZ directed a scheme that caused Centennial to overstate its earnings by more than $32 million between 1994 and the end of 1996. He fabricated dozens of phony sales transactions, and used his own funds, borrowed on margin against the value of Centennial stock, to pay for many of those sales and deceive the company's outside auditors. In 1996, PINEZ instructed subordinates at Centennial to fabricate and place in inventory, boxes of phony computer components that were commercially worthless, but which appeared to contain actual product worth more than $2 million, to deceive Centennial's outside auditors as to the value of
Centennial's inventory. PINEZ also directed subordinates to falsify and destroy company books and records to support the inflated sales and other financial figures. PINEZ, who continued to own more than half of the outstanding stock in
the company after it went public, stood to gain tremendously by driving up the price of the company's stock.
Centennial, located in Wilmington, Massachusetts, is a manufacturer of personal computer ("PC") cards. PC cards are credit-card-sized devices that contain memory chips and other electronic components. They are inserted in PC's to add memory, software applications, and other capabilities. Centennial's stock price fell sharply in February 1997 after it publicly announced that its outside auditors were examining its recognition of revenue. In June 1997, Centennial announced that it would have to write off some $32 million in earnings over the 1994 to 1997 period as a result of the review conducted by its auditors.
Judge Tauro scheduled sentencing for May 17, 2000. PINEZ, who remains incarcerated, faces a maximum sentence on the conspiracy count of 5 years, a fine of $250,000, and restitution.
The case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorneys John J. Falvey, Jr. and Paul G. Levenson
of Stern's Economic Crimes Unit. |
