November 4, 2009
Three Former Symbol Technologies Settle Accounting Fraud Charges
On November 2, 2009, the United States District Court for the Eastern District of New York entered final consent judgments against three defendants in the pending enforcement action against former executives of Symbol Technologies, Inc. ("Symbol"). The Commission's complaint, filed on June 3, 2004, alleges that from 1998 until early 2003, the defendants engaged in a fraudulent scheme to inflate revenue, earnings and other measures of financial performance in order to create the false appearance that Symbol had met or exceeded its financial projections.
Kenneth Jaeggi, Symbol's Chief Financial Officer, consented to entry of a judgment that requires him to disgorge a total $3,091,539, consisting of $2,274,935 in ill-gotten gains he obtained as a result of the conduct alleged in the complaint and $816,604 in prejudgment interest, and to pay a civil penalty of $250,000. The complaint alleges that Jaeggi: (i) spearheaded what was known within Symbol as the "Tango sheet" process, through which baseless accounting entries were made in order to conform the company's raw quarterly results to management's projections; (ii) engaged in channel stuffing and other revenue recognition schemes; and (iii) manipulated restructuring charges, operations reserves and inventory levels to boost reported earnings.
Christopher DeSantis, Symbol's former Vice President of Sales Finance, consented to entry of a judgment that requires him to pay a civil penalty of $40,000 (plus $1 of disgorgement. The complaint alleges that DeSantis carried out aspects of the channel stuffing scheme and other fraudulent revenue recognition practices, as well as the manipulation of reported inventory levels and accounts receivable data to conceal the adverse side effects of the revenue recognition schemes.
James Heuschneider, Symbol's former Director of Customer Service, consented to entry of a judgment that requires him to pay a civil penalty of $35,000 and to disgorge $3,587, consisting of $2,280 in ill-gotten gains as a result of the conduct alleged in the Commission's complaint and $1,307 in prejudgment interest. The complaint alleges that Heuschneider engaged in improper practices to overstate the customer service department's revenue and earnings.
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