Toss the kids in jail. That may or may not get the attention of their parents. Just a thought.
Former Gateway CEO, two others charged with fraud
Last modified: November 13, 2003, 2:10 PM PST
By Dawn Kawamoto
Staff Writer, CNET News.com
news.com.com
Gateway former chief executive Jeff Weitzen and two other former executives were charged with fraud Thursday by the Securities and Exchange Commission, which alleged the parties engaged in manipulating earnings results to meet Wall Street expectations.
John Todd, former chief financial officer, and Robert Manza, former controller, were also charged with fraud.
The SEC announcement caps an investigation that began in late 2000. The highly touted Weitzen and Todd were brought in to aid the troubled company in the late '90s.
"The former Gateway executives the commission charges today were preoccupied with meeting analysts' expectations, to the extent that they fraudulently reverse-engineered Gateway's financial results to do so," said Randall Lee, regional director of the SEC's Pacific Regional Office, in a statement. "This action also demonstrates the commission's resolve to prosecute those executives, including CEOs, who mislead investors about the underlying health and business prospects of their companies."
The commission filed a lawsuit in U.S. Federal District Court in San Diego, specifically alleging the executives engaged in fraudulent earnings manipulation, false statements and concealing important information about Gateway's PC business during the second and third quarters of 2000.
Weitzen was also charged with allegations he violated antifraud and reporting provisions as a "control person" of Gateway. And Todd and Manza were also charged with violating record-keeping and internal controls provisions, as well as aiding and abetting alleged Gateway violations of reporting and record-keeping provisions.
In a separate proceeding, also announced Thursday, Gateway reached a settlement with the SEC to cease and desist--without admitting or denying the commission's findings--from violations of the antifraud; reporting; books and records; and internal controls provisions of the federal securities laws.
"We are very pleased to put this issue from our past behind us," Ted Waitt, Gateway founder and CEO, said in a statement. Waitt had relinquished his management role at the company in late 1999 but returned as CEO in early 2001. "We are a completely new Gateway, and bringing this issue to closure allows us to now focus completely on serving our customers."
Gateway also noted that no member of current management was ever a target of the investigation.
Neither Weitzen nor Todd could be immediately reached for comment. |
