Print this article | Return to Article | Return to CFO.com
Former KPMG Consulting principal Larry Rodda settles with SEC in the case growing from Peregrine's massive accounting scandal.
Sarah Johnson, CFO.com | US
February 6, 2008
The Securities and Exchange Commission has settled its three-year-old case with a former KPMG Consulting principal who was involved in Peregrine Systems' accounting fraud.
Larry Rodda has agreed to pay the SEC $80,000 to settle the charges. According to the regulator, Rodda signed four "sham" software license agreements that enabled the company to falsely record $22 million in revenue while he worked at KPMG Consulting, which changed its name to BearingPoint in 2002.
The SEC's announcement comes two weeks after U.S. District Judge Thomas Whelan sentenced Rodda to six months in prison and six months of house detention for conspiracy to commit securities fraud, wire fraud, bank fraud, and falsification of a public company's books. Rodda will also be supervised for two years when he's released from prison. Like others involved in the Peregrine cases, he had pleaded guilty to the charges.
Neither BearingPoint nor Rodda's attorney returned CFO.com's request for comment.
Peregrine's accounting scandal ensnared several of its former officials, including ex-CFO Matt Gless, ex-CEO Stephen Gardner, and an Arthur Andersen auditor. Gless and Gardner have pleaded guilty to criminal charges.
The scandal was brought to light in 2003 after Peregrine restated its financial results for 11 previous quarters, reducing its reported revenue of $1.34 billion by more than $507 million. It was later sold to Hewlett-Packard.
According to the SEC, Peregrine reported inflated revenue numbers in its regulatory filings for fiscal year 2000 through the third quarter of its 2002 fiscal year. Part of that inflation related to the sham software agreements signed by Rodda, the SEC said. Rodda made it appear as though Peregrine had sold the software through KPMG Consulting. However, the technology consultancy had no obligation to pay for those agreements, a fact that Rodda knew, according to the SEC.
The commission also alleged that Rodda signed a false audit confirmation to conceal that those agreements were hollow.