A former chief financial officer of Gemstar-TV Guide International Inc. has agreed to settle charges stemming from the company’s accounting scandal, according to the Associated Press.
The terms of the deal made with Elsie Leung, reportedly announced during a court hearing yesterday, were not disclosed. The Securities and Exchange Commission now must approve the arrangement, which would close the civil case against the former finance chief.
The settlement does not include former Gemstar CEO Henry C. Yuen.
Both individuals were accused of inflating revenue by $250 million from March 2000 through September 2002 to meet revenue projections and boost the company’s stock. In January, the SEC reached a tentative settlement with the former financial executives, but the deal subsequently collapsed, reported the AP.
Yuen’s civil trial is scheduled to get under way on December 9. He is also scheduled to be sentenced December 19 on criminal charges of obstructing the SEC’s investigation, according to the AP. Yuen agreed to a deal that calls for two years probation, including six months of home detention, and $1.25 million in fines and donations to victims of fraud, noted the wire service.
Officials at Gemstar, however, are opposing the deal, calling it “a slap on the wrist,” said a report in The Los Angeles Times. “Yuen’s gross misconduct — and subsequent coverup — provide a textbook example of the conduct the task force was created to root out and punish,” said Gemstar lawyers in a filing, according to the paper.
Gemstar general counsel Stephen H. Kay reportedly asserted that the company has incurred more than $100 million in legal fees and lawsuit settlements as a result of the “misconduct engaged in by Mr. Yuen’s management team.”
The AP pointed out that U.S. District Court Judge John Walter could choose to void the plea deal if he decides that Yuen’s probation and fine do not constitute an appropriate punishment. If that happens, Yuen would be forced to stand trial on the criminal charges.
The SEC accused the executives of recording licensing and advertising revenue from expired or disputed contracts, engaging in “round-trip” transactions, and inflating the company’s advertising revenues by booking cash at the advertising that should have been recorded at Gemstar’s media and licensing businesses.