Seven former top executives of Symbol Technologies Inc. and their chief legal counsel were charged Thursday with deceiving investors by inflating the company’s reported earnings by more than $200 million.
An indictment unsealed in federal court in Brooklyn accuses the company’s former president, Tomo Razmilovic, chief financial officer, Kenneth Jaeggi, and the other defendants of devising various accounting schemes to meet Wall Street projections for earnings and to fatten their own incomes.
The defendants “cooked the books every which way they could,” U.S. Attorney Roslynn Mauskopf said.
The Holtsville-based company a leading maker of bar-code scanners and wireless networks has agreed to pay $139 million in fines and restitution, Mauskopf said. That includes a $37 million fine to settle a Securities and Exchange Commission case alleging a pattern of fraud between 1998 and early 2003.
“Symbol has worked tirelessly during the past two years to resolve problems created by the company’s former management,” said Symbol president and chief executive William Nuti. “We have now succeeded in putting the vast majority of our problems behind us and have taken this opportunity to put in place a dramatically improved corporate governance infrastructure.”
The defendants were awaiting arraignment in federal court on Long Island on multiple charges of securities fraud; if convicted, they face up to 20 years in prison. The names of their defense attorneys were not immediately available.
Authorities alleged that the defendants were so obsessed with meeting analysts’ estimates that they ignored required accounting practices and brazenly manipulated revenue and earnings.
The company allegedly recorded sales of products to vendors who made no commitment to buy them; overstated expenses to create a “cookie jar” reserve that could be tapped to bolster results; allowed executives to set their own prices when exercising stock options; and used false accounting entries to bolster the bottom line.
The SEC also accused the company of interfering with its investigation by destroying or withholding incriminating data.
Five former managers have previously pleaded guilty to conspiracy charges arising from the case.