Ex-Xerox executives settle suit

0 Comments | Deseret News (Salt Lake City), Jun 6, 2003 | by Stephen Singer Associated Press writer

The U.S. Securities and Exchange Commission on Thursday charged former Xerox chief executive Paul Allaire and five other ex-Xerox Corp. executives with civil securities fraud over accounting methods that the regulator said overstated earnings for the huge copier maker.

The six men settled the civil suit with a $22 million payment that includes penalties and forfeiting profits, the SEC announced. They did not admit to or deny the allegations, the SEC said.

"The executive suite should be reserved for those who will tell the investing public the truth about the company's performance," said Paul R. Berger, associate director of enforcement at the federal agency. "That didn't happen here, and Xerox's shareholders were deceived."

In addition to Allaire, those charged were G. Richard Thoman, former president and chief operating officer; Barry D. Romeril, former chief financial officer; Philip D. Fishbach, former controller; Daniel S. Marchibroda, former assistant controller; and Gregory B. Tayler, former director of accounting policy.

The SEC's complaint, which was filed in U.S. District Court for the Southern District of New York, accused the ex-officials of using improper accounting methods to increase equipment revenue and inflate earnings.

The accounting methods were not disclosed to investors, the SEC said.

Allaire was in Italy and, said a woman who answered the phone at his Norwalk, Conn., home.

Messages left for Fishbach, of Rochester, N.Y., Daniel S. Marchibroda, of Madison, Conn., and Gregory B. Tayler, of Toronto, were not immediately returned.

Thoman, of Greenwich, and Barry D. Romeril, of Norwalk, Conn., have unlisted telephone numbers and could not be reached for comment.

Christa Carone, a spokeswoman for Xerox in Rochester, N.Y., said the company "completely changed management" in the past two years.

"These are issues of the past, and the new management team is clearly focused on making progress today," she said.

Xerox, headquartered in Stamford, Conn., last year agreed to pay a record $10 million civil penalty and revise financial statements back to 1997 to settle federal regulators' allegations of accounting fraud by the world's largest copier company.

The SEC sued Xerox in federal court in New York, alleging that the company used a variety of what it called "accounting tricks" and "accounting opportunities" to increase its earnings by some $1.5 billion and conceal its performance from investors.

The SEC said in legal documents Thursday that the former Xerox officials used accounting measures at the end of each financial reporting period from 1997 to 2000 to close a gap between the company's underlying earnings and its internal targets and those of Wall Street analysts.

The lawyer for James Bingham, a former Xerox executive who accused Xerox of firing him for warning executives of accounting irregularities, said the civil lawsuit vindicates Bingham.

Allaire, who is barred for five years from serving as a corporate officer or director, announced he will resign from the boards of Lucent Technologies Inc. and Priceline.com Inc., the SEC reported Thursday.