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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (94449)	2/12/2002 9:32:55 AM
From: JHP	Respond to of 132070

SEC speaks with ex-EMC executive on revenue claims By Ross Kerber, Globe Staff, 2/12/2002 former EMC Corp. executive claims in a court deposition that the company improperly recognized revenue and violated business contracts, allegations that have drawn the attention of the Securities and Exchange Commission. The SEC spoke recently to Kenneth Todd Gresham, a former EMC vice president, according to a lawyer close to the case. Gresham testified in a court deposition last spring about the Hopkinton-based company's dealings with two resellers of its data-storage equipment. EMC denies the allegations raised by Gresham, who is being sued by his former employer for allegedly violating a noncompete clause when he joined an Irish storage company. In a deposition taken for that suit last spring, Gresham said he left EMC partly over ''ethical, moral'' issues, including the way it booked revenue from Unisys Corp. and handled contracts with Fujitsu Siemens, two resellers of EMC data-storage equipment. EMC spokesman Mark Fredrickson said the company denies the wrongdoing alleged by Gresham. Fredrickson said the SEC notified his company last month that it planned to speak with Gresham. EMC has not been told it is the subject of a formal investigation, Fredrickson said. A spokesman for the SEC declined to comment yesterday. A Unisys Corp. spokesman would not address the allegations but said the company is on good terms with EMC. Fujitsu Siemens representatives in Germany could not be reached. The dispute began last spring when EMC sued Gresham in Suffolk Superior Court in Boston, alleging he violated a noncompete agreement when he left EMC to join Dublin-based Eurologic Systems Inc., a closely held provider of network storage products. EMC sought unspecified damages and later named Eurologic as a defendant. In a joint response Sept. 10, Gresham and Eurologic called the issue moot because Gresham had become an independent consultant working for Eurologic, not a Eurologic employee. Moreover, the much-smaller Eurologic doesn't compete with EMC, the leading storage-equipment producer, the response states. In a May 24 deposition in the case, which is still pending, Gresham said he left EMC because of reductions in his responsibilities and compensation plan. Under questioning, he also cited problems within the company he described as ''ethical, moral.'' He said he ''was directed [by EMC executives] not to honor contractual commitments'' to EMC resellers. In one case, Gresham said in the deposition, a vice president for reseller Unisys asked to return inventory that its customers weren't buying and to receive credits from EMC. He said Unisys had agreed to take the equipment only because ''EMC had convinced them'' they would be able to sell it. Gresham said in the deposition that he wasn't permitted to give the credits. Asked by a lawyer if this was ''a contractual violation or a revenue-recognition problem,'' Gresham replied, ''both.'' EMC also heard complaints from Fujitsu Siemens on a similar matter in late 2000 and early 2001, he said. Together these problems showed a ''lack of integrity,'' within the sales force, he said. At another point in the deposition, Gresham states he never contacted the SEC or other outside law-enforcement agencies about his concerns while he was at the company. He said he did speak with others within EMC. EMC spokesman Fredrickson said Gresham, who oversaw the Unisys account, never raised concerns with senior executives before he left. ''It is telling that these irresponsible allegations are only brought in the context of completely unrelated litigation,'' Fredrickson said. ''These are tactics intended to publicize unrelated frivolous allegations.'' Fredrickson said the company had no objection when the SEC notified the company that it would speak to Gresham. Gresham referred questions to his attorney, Russell Beck of Epstein, Becker and Green, who said he couldn't elaborate on the deposition. A Eurologic spokesman said that, while the company was a party in the suit, the revenue-recognition dispute was an issue between Gresham and EMC. Ross Kerber can be reached by e-mail at kerber@globe.com. This story ran on page F1 of the Boston Globe on 2/12/2002. © Copyright 2002 Globe Newspaper Company. [ Send this story to a friend \| Easy-print version \| Search archives ]