Former Symbol execs indicted

Seven former top executives at Symbol Technologies are being arraigned this afternoon on federal charges of “massive corporate fraud.”

An indictment was unsealed this morning by the U.S. Attorney’s office, charging the former CEO, CFO, and several former vice presidents with a variety of fraudulent practices that inflated the WLAN vendor’s earnings from 1999 to 2002 by over $200 million. An eighth defendant, the former general counsel, is charged with orchestrating a scheme to fraudulently exploit the company’s stock option plan to enrich the executives and illegally minimize their tax obligation at the company’s expense.

Five other former executives previously pled guilty to conspiracy charges arising out of the same investigation.

No charges were filed against Symbol itself and its current management. But President and CEO William Nuti and Board Chairman Salvatore Iannuzzi signed agreements with the U.S. Attorney’s office and the federal Securities and Exchange Commission (SEC) to pay $139 million to compensate shareholders for losses due to the swindle. Of that amount, $37 million in cash will be a fund for stockholders who bought Symbol stock over a specific 18-month period. Symbol will pay $98 million, mostly in the form of stock, to settle civil suits by shareholders.

In the agreements, Symbol promised to continue cooperating with the various investigators, and confirmed a wide range of internal changes and actions to clean house and remedy faulty oversight procedures.

Agents from the Postal Service and the IRS were also involved in the investigation, which began in April 2001, when the SEC got an anonymous letter exposing fraudulent revenue recognition practices in two transactions. The writer warned these were “just the tip of the iceberg of how Symbol continues to manipulate and improperly handle business accounting.”

In a written statement, Symbol CEO Nuti said the agreements put “the vast majority of our problems behind us and have taken this opportunity to put in a place a dramatically improved corporate governance infrastructure.”

The ex-executives named in the indictment are: Tomo Razmilovic, president and CEO, Kenneth Jaeggi, CFO, Brian Burke, senior vice president of operations; Michael Degennaro, SVP of finance; Frank Borghese, VP of finance, Jame Heuschneider, director of finance; and Leonard Goldner, general counsel.