Six former Xerox Corp. executives, including ex-CEO Paul A. Allaire, have agreed to pay $22 million to settle federal civil securities fraud charges related to accounting practices that led the office equipment maker to overstate profits.
The money includes penalties and forfeited income, the Securities and Exchange Commission said Thursday. The men did not admit to or deny the allegations.
“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.”
Besides 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.
In a statement released by their attorneys, Allaire and Romeril said they wanted to “get on with their lives rather than undertake lengthy and expensive litigation of the issues.” The settlement prohibits them from publicly denying the SEC’s allegations.
Messages left for Fishbach, of Rochester, N.Y., Daniel S. Marchibroda, of Madison, Conn., and Tayler, of Toronto, were not returned. Thoman, of Greenwich, and 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 new management team is clearly focused on making progress today,” she said.
Xerox, based 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 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, also will resign from the boards of Lucent Technologies Inc. and Priceline.com Inc., the SEC said.