Risk Management

Peregrine Exec Admits Lie to FBI

After a mistrial on 32 charges of conspiracy and fraud, he pleads guilty to a single count of lying in a federal investigation.
Stephen TaubJanuary 17, 2008

A former executive of Peregrine Systems pleaded guilty to one count of lying to the FBI during an investigation into the software company’s massive accounting scandal earlier in the decade, the San Diego Union-Tribune reported.

Gary Lenz is the 12th individual to plead guilty to charges related to the scandal, according to Bloomberg. Altogether, prosecutors charged 18 people in the fraud. Lenz faces up to five years in prison and a $250,000 fine.

In February 2003, Peregrine restated its financial results for 11 quarters during fiscal years 2000, 2001, and 2002, reducing previously reported revenue of $1.34 billion by more than $507 million.

Peregrine, which was once worth more than $4 billion, filed for bankruptcy protection in 2002, emerged from bankruptcy the following year, and in 2005 was sold to Hewlett-Packard Co. for $425 million.

During Peregrine’s reorganization in 2003, the company disclosed that it had overstated revenue by $509 million and understated losses by $2.6 billion over a 33-month period that began in April 1999, according to an earlier article in the Union-Tribune.

Former CFO Matt Gless is among those who have pleaded guilty.

Lenz initially was charged with 32 counts of conspiracy and fraud and went on trial in April of this year. However, jurors were deadlocked following a three-month trial and 11 days of deliberations, and U.S. District Judge Thomas Whelan declared a mistrial. His retrial was scheduled to begin on Jan. 29.

Lenz did not admit he took part in the fraud. Rather, he admitted he had lied during the subsequent investigation.

He denied knowing that Peregrine made quarterly revenue projections when he in fact had participated in many revenue-projection meetings, according to the Union-Tribune.

Lenz’s plea is reminiscent of Martha Stewart’s who served five months in prison and five months of home detention for lying to investigators about her sale of ImClone Systems stock in 2001.

“He wants to get these matters behind him,” said his attorney, Thomas Bienert. “The past four years have come with tremendous emotional and economic expense.”