Remember when Informix [IFMX] SLAPPed?
"Ex-Informix CEO charged with fraud
ACCUSED OF CONCEALING SCANDAL
By Howard Mintz
Mercury News
A federal grand jury Thursday indicted the former chief executive officer of Menlo Park-based Informix on securities fraud charges, accusing him of concealing one of the biggest accounting scandals in Silicon Valley history.
In an eight-count indictment handed up in San Francisco, Phillip White, 60, of Atherton, was charged with playing a central role in a financial fraud at Informix five years ago that is believed to have cost investors as much as $1 billion. The revelations of fraud inside Informix, now known as Ascential Software, eventually forced the company and its auditors to pay roughly $142 million to investors to settle private lawsuits.
Informix's troubles, a precursor of the larger corporate scandals that have rocked Wall Street over the past year, at one point also prompted the company to restate $300 million in earnings as a result of accounting irregularities in 1994 through 1997. White was at the helm of the company during those years.
Federal prosecutors specifically allege that White misled investors about Informix's financial outlook, initially blocked the company from restating its earnings, concealed financial shenanigans from Informix's auditors and lied to the Securities and Exchange Commission. The SEC filed related civil charges against White on Thursday.
White will make his first appearance in court Tuesday. His lawyers called the charges ``wrong and baseless.''
``Phil White acted properly and responsibly as CEO of Informix,'' said San Francisco attorney Elliot Peters. ``In today's climate, it is politically popular to indict former CEOs. But in this instance, the government has wrongly charged a man who did nothing more than act as a responsible corporate leader.''
The Informix case broke in 1999, when the company agreed to the large settlement with investors who had gathered evidence that White and other top executives allegedly cooked the company's books in the mid-1990s to look more competitive with rival Oracle.
Court papers filed in the civil case alleged that overstating earnings at Informix was so rampant that company insiders referred to the end of the year as ``December the 45th.'' Informix forced White out in July 1997, and the company's stock plunged 50 percent when it disclosed that it would have to restate its 1996 financial statements.
The indictment alleges that White made $3.2 million from stock sales in 1996, while the company was inflating its value to the public.
Federal prosecutors two years ago indicted Walter Konigseder, Informix's former head of European sales, in connection with the fraud allegations. But he lives in Germany and cannot be extradited because he is a German citizen. No other former Informix executives have been charged, making the case somewhat unusual. Most corporate fraud cases first target lower-level executives who then cooperate with prosecutors building a case against CEOs."
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