Regulation

Former Vari-L Execs Face Charges

The manufacturer of wireless communications components was considered a promising high-tech company before an accounting scandal in 2000.
Stephen TaubMarch 5, 2004

Two former finance executives of the defunct Vari-L Co. Inc. have been criminally charged with falsifying information to inflate the company’s revenue, according to the Securities and Exchange Commission and the U.S. Attorney for the District of Colorado.

Former chief financial officer Jon Clark was charged with making a false statement in a report filed with the SEC; former controller Sarah Hume was charged with one count of falsifying corporate books and records. Their actions were designed to inflate annual revenues of the Denver-based company — in some cases by more than $1.3 million — according to the Rocky Mountain News.

If convicted, each faces up to 10 years in federal prison. Clark could not be reached for comment by the paper; Hume declined to comment.

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In 2001 the SEC filed a civil complaint against Clark, Hume, and others in the U.S. District Court for the District of Colorado, alleging that they and Vari-L engaged in a massive financial reporting fraud. That fraud, the commission maintained, was designed to show consistently increasing revenue and earnings, instead of losses, from 1996 through the quarter ended March 31, 2000, by recognizing false revenue, improperly capitalizing and depreciating costs, overstating inventory, and improperly deferring period costs.

Those cases were settled, but shareholder lawsuits and the company’s delisting from the Nasdaq stock market continued to take their toll, according to the News. About a year ago Vari-L was sold to California-based Sirenza Microdevices Inc. for about $13.6 million in common stock and cash, reported the paper.

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