Friday, May 30, 2008
Former Centerpulse CFO Settles SEC Charges of Inflating Income
The SEC announced that Urs Kamber, the former Chief Financial Officer of Centerpulse Ltd., agreed to settle the Commission's charges against him arising from his alleged involvement in the fraudulent inflation of Centerpulse's income during the third and fourth quarters of 2002. Without admitting or denying the Commission's allegations against him, Kamber has consented to the entry of a final judgment. which orders Kamber to pay a $50,000 civil penalty, $65,013 in disgorgement, and $22,824 in prejudgment interest. The final judgment also bars Kamber for five years from acting as an officer or director of any public company that has securities registered with, or is required to file reports with, the Commission.
The SEC's complaint alleges that Kamber, along with two other former Centerpulse executives, (1) fraudulently inflated Centerpulse's third quarter 2002 income by improperly deferring recognition of a $25 million expense, refusing to write down $3.4 million in costs associated with an impaired asset, and approving $3.6 million in improper reserve adjustments; and (2) fraudulently inflated Centerpulse's fourth quarter and fiscal 2002 income by refusing to increase a reserve to cover at least $18 million in liabilities, improperly using anticipated refund credits to offset another $5 million in expenses, and again refusing to write down $3.4 million in costs associated with an impaired asset.
In related administrative proceedings, Dennis L. Hynson, CPA, Christopher W. Kelford and Paula J. Norbom, CPA, the former vice presidents of finance for Centerpulse's three U.S. divisions, have consented to the entry of cease-and-desist orders relating to improper accounting decisions they made during the third quarter of 2002.