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Xerox Not Off The Hook Yet

Sep 24, 2002 | AP

Federal prosecutors are investigating accounting practices at Xerox Corp. that were previously reviewed by securities regulators in a probe that led to a record $10 million civil penalty against the copy machine maker.

The Stamford-based company issued a statement Monday night announcing the new investigation and saying it would cooperate with prosecutors.

Xerox (XRX: down $0.71 to $5.96, Research, Estimates) stock tumbled as much as 14 percent Tuesday on the news, but recovered slightly by midday.

Agents from the Federal Bureau of Investigation recently questioned James Bingham, a former assistant treasurer at Xerox, and the Securities and Exchange Commission has informed other individuals, including current Xerox Treasurer Greg Tayler, that they could face civil charges in the case according to the Wall Street Journal.

Xerox settled allegations by the SEC in April. The commission alleged that the company used a variety of what it called "accounting tricks" and "accounting opportunities" to boost earnings by about $1.5 billion, misleading investors about its results.

Xerox spokeswoman Christa Carone declined to comment Monday on the new investigation. A spokeswoman for the U.S. attorney's office also declined to comment.

The SEC said Xerox senior management "orchestrated" a four-year scheme to disguise its operating results, using improper accounting techniques to accelerate the recognition of equipment revenue.

Under the settlement, the world's largest copier company agreed to pay the fine, restate its financial statements for 1997 through 2000 and adjust previously announced 2001 results. The company did not admit or deny wrongdoing in the settlement.

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