A former European sales executive at Informix Software has been indicted by a federal grand jury in California on fraud charges after he allegedly inflated his division's income and revenue figures from 1994 to 1996.
Former Informix Vice President Walter Konigseder was charged Thursday in an 11-count indictment announced by the U.S. Attorney's Office in San Francisco. Konigseder is charged with wire fraud and criminal securities violations for allegedly participating in or approving several "sham sales transactions" recorded in the company's Central and Eastern European regions, where he was in charge, according to the indictment.
Konigseder allegedly overstated "revenue and earnings in order to meet the company's financial targets," the indictment states.
Konigseder's Munich phone number is unlisted and he could not be reached for comment.
According to the government, the defendant's alleged inflated sales figures caused Informix to overstate its 1996 annual net revenues by 29%, listing revenues as $US939.3 million. A restatement in 1997 lowered the actual revenues to $US727.8 million. The company's net income was overstated by 233% due to the alleged fraud. Initially listed as $US97.8 million, the 1997 restatement changed the year's results to a $US73.6 million loss.
Following the restatements, the company's stock dropped from a high of $US17 a share to as low as $US6.50 a share, losing 60% of its value, according to the government. Shareholders in the company lost more than $US1.5 billion, according to the U.S. Justice Department.
Revenues and income were also improperly inflated by his sales division in 1994 and 1995, the government said.
Konigseder is also being sued in U.S. District Court in San Francisco by the U.S. Securities and Exchange Commission in a civil case seeking monetary damages related to the alleged fraud at Informix, according to the SEC.
The defendant is a German citizen, according to the Justice Department. The U.S. Attorney's Office has indicated that extradition will be sought if Konigseder refuses to come to the U.S. to respond to the indictment.
Jim Coffman, an assistant director in the SEC enforcement division in Washington, said today that the investigation remains underway.
"It's not the end of it," Coffman said "This case demonstrates that we're not going to let national borders protect people who participate in securities fraud in our markets."
Informix, a database software vendor, was formerly based in Menlo Park, Calif., and is now headquartered in Westborough, Mass.
Spokesman Paul Collins today called the government's case against Konigseder "ancient history" because he no longer works for the firm.
In January, the SEC settled an enforcement action against Informix related to the filing of the inflated financial figures, which violated various securities law provisions. Informix consented to the order without admitting or denying the SEC's findings