Risk Management

Water Cooler ex-CFO Found Guilty of Lies

Prosecutors reportedly accused the finance chief of failing to tell auditors that proceeds of a $1.75 loan to an investor were being used to buy sh...
Stephen TaubNovember 1, 2006

The former finance chief of a small water cooler company pleaded guilty to lying to his auditors about the company’s 2001 initial public offering.

Gary Wolff, ex-CFO of AquaCell Technologies and a founder of the company, pled guilty to one count of making false and misleading statements on Tuesday before U.S. District Judge Gerard Lynch in federal court in Manhattan, according to a story by a Dow Jones reporter.

The 68-year-old executive will face up to 10 years in prison when he is sentenced on Jan. 26. But the sentence could be much shorter. Peter Driscoll, his lawyer, told Dow Jones that the range under federal sentencing guidelines would be 10 months to 16 months in prison.

“He’s getting this behind him,” Driscoll told the wire service. “He’s trying to be as candid and forthright with the court as he can be.” On Tuesday afternoon, the company announced that Wolff had resigned as CFO.

“We regretfully accept this resignation with the understanding that it is in the best interest of both Mr. Wolff and the company,” said AquaCell chief executive officer James Witham. In late 2005, the company withdrew its common stock listing from the American Stock Exchange.

Wolff was accused of lying to the company’s auditors about a deal to lend $1.75 million of the IPO’s proceeds to an investor to buy 350,000 shares as part of the IPO, according to the news service.

Wolff was also accused of making a series of “misrepresentations, omissions and half-truths” to the company’s auditors about the loan when they questioned him between May 2001 and November 2001, according to the report.

Prosecutors reportedly accused Wolff of failing to tell auditors that loan proceeds were being used to buy shares in the IPO. Rather, he reportedly told them that the investor planned to use the proceeds for his mortgage business.

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