Risk Management

No Bars for Ex-CFO of Bar-code Company

One-time finance chief of Symbol Technologies, now part of Motorola, pleads guilty in stock-option backdating fraud case but gets probation.
Stephen TaubFebruary 28, 2008

It looks like the former CFO of bar-code device maker Symbol Technologies has avoided the prospect of being covered in black stripes himself.

Kenneth Jaeggi, the former finance chief of Symbol — now a part of Motorola — Wednesday pleaded guilty to fraud stemming from alleged backdating of stock option grants, according to Newsday.

Jaeggi, however, will not be going to prison. Under the plea deal, Jaeggi must repay $450,000 to Motorola and to serve three years probation.

Newsday said that the $450,000 reflected the amount calculated by federal officials that Motorola lost as a result of the options scheme. Jaeggi also agreed to pay the Securities and Exchange Commission $3.3 in a separate settlement, according to the report.

Jaeggi was one among a number of Symbol executives indicted in 2004 on a variety of charges stemming from an alleged scheme to inflate the company’s reported earnings. Former chief executive Tomo Razmilovic fled to Sweden, which has refused to extradite him, Newsday said.

Jaeggi, senior vice president of finance Michael DeGennaro, and senior vice president and general manager Frank Borghese went on trial in early 2006. A mistrial was declared after six weeks and four days of jury deliberations resulted in a deadlocked jury.

The paper pointed out that a federal appeals court in August ruled that it would amount to double jeopardy to retry DeGennaro and Borghese. However, the court ruled that the judge hearing the earlier case was too quick to declare the mistrial. Bloomberg News noted that some jurors had said that they were prepared to convict Jaeggi of one count of conspiracy to commit securities fraud.

Jaeggi was facing a re-trial on charges that he inflated sales at Symbol by more than $200 million from 1999 to 2002, according to the wire service. He faced 20 years in prison.

“He admitted he participated in a ‘look back’ scheme in connection with the exercise of stock options,” Robert Nardoza, a spokesman for Brooklyn U.S. Attorney Benton Campbell, told Bloomberg. “Jaeggi said executives were allowed the opportunity to ‘look back’ and pick the second-lowest price of the month, which enabled them to lower their taxable gain.”

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