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Ex-CFO Hid Cookie Jars, Grand Jury Charges

Former finance chief of bankrupt FPA Medical Management indicted on 28 counts of attempting to defraud investors. Also: Touchy-feely tech company t...
David KatzFebruary 13, 2002

>>A federal grand jury indicted Steven Mark Lash, former CFO of FPA Medical Management, for allegedly inflating earnings before company imploded in 1998, according to AP…Erstwhile finance chief hid use of cookie-jar reserve accounts that were manipulated to pump up earnings, grand jury alleges…Indictment also accuses Lash of falsely stating in federal filings that FPA had positive cash flow from operations…Lash charged Tuesday with 28 counts of trying to defraud investors…Prosecutors say Lash made more than $1.4 million from sale of FPA stock at prices kept artificially high by his misrepresentations and omissions…Also took millions in bonuses, stock options, indictment says…

Nice work by board, too: Just days before bankruptcy filing, directors hiked $500,000 base pay of CEO Stephen Dresnick, to $850,000, gave $50,000 raises to two executive VPs making $345,000 apiece…Board also doled out $1.06 million bonus to Dresnick, approved nearly $2 million in bonuses for other executives…At peak, San Diego-based FPA had 1.5 million patients…Owned clinics, doctor groups in 21 states…Shareholders, lenders lost hundreds of millions when FPA’s real financial condition was revealed…FPA filed for Chapter 11 in July 1998…Assets: $46.3 million…Debts: $345.5 million…

>>Elsewhere, Immersion Corporation, in midst of suing Microsoft and Sony for patent infringement and getting shot down by analysts, announces CFO Victor Viegas adding mantles of president, COO…Sounds like one overdressed guy…Viegas to head growing licensing business segment of company, which makes “haptic technology”…Gives users feeling they’re “touching” visual objects on computer screen…

San Jose, California-based company had busy day Monday, issuing releases reporting total fourth-quarter revenues of $5.2 million (same as year ago), lawsuits, new robes for finance chief…On Tuesday, Bear Stearns, J.P. Morgan issued downgrades…Shares fell 92 cents, to $3.58 at close…Viegas ascends to hot seat after stint as mere CFO, VP of finance since August 1999… Led IPO in November of that year…Served lengthy CFO stretches at Macrovision, licensor of video, software copy-protection technologies (1996 to 1999), and Balco Inc., auto-service equipment maker (1986 to 1996)…

>>Patents not only way up ladder…Solid cash flow buoys career hopes…Latest proof: Matthew Hale floating on up from finance SVP to CFO of S1, financial software maker…CEO Jaime Ellertson praises Hale heartily for helping boost EBITDA and cash flow from operations…Latter climbed from minus-$16 million in Q1 to $9 million on plus side in Q2, dipping below $7 million in Q3…Full story told in after-hours earnings call last night…

Hale fills spot vacated by Robert Stockwell about nine months ago, says Reuters…Stockwell exercised $8.6 million in options last year…Market seems to like Hale, 48…stock was up about a buck to over $16 in late-afternoon trading Tuesday after announcement…Hale managed financial operations of tech companies for 20-plus years…As CFO of Q UP, he negotiated S1’s acquisition of that company, now S1 Community and Regional eFinance Solutions Group…

Recession might have taken toll on career of F. Trent Hill, who resigned as CFO at Sonoco Products Company to chase down those increasingly popular “other interests,” company release says…Barely two weeks ago, Hartsville, S.C.-based maker of packaging products reported that plunging prices helped slice fourth-quarter net income 25 percent, to $27 million (28 cents per diluted share) from $36 million (37 cents) last year…

Hill spent 23 years at Sonoco, including two stints as VP of finance and one as VP of industrial products…Seems to have read the signs…On December 31, filed for proposed sale of nearly 11,000 shares of restricted stock, with proceeds estimated at about $280,000, following up on actual sale of same number of shares for another $280,000 on December 13 and December 10 sale of about 10,000 indirectly held shares for $247,000…Charles Hupfer, VP-treasurer and secretary with 26 years at the company, steps in as CFO for now, “pending selection of a permanent replacement,” Sonoco said…