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Ex-Exec Pleads Guilty in Peregrine Case

June 17, 2003|From Associated Press

A former vice president of Peregrine Systems Inc. pleaded guilty Monday to a conspiracy charge, making him the second executive at the software maker to do so and to agree to cooperate with a federal inquiry into financial fraud. The company is under Chapter 11 bankruptcy protection.

Steven Spitzer, who served as vice president in Peregrine's sales department from 1997 until last year, pleaded guilty to conspiracy to commit securities fraud. The charge carries a maximum of five years in prison.

Spitzer, 44, negotiated some of the largest of Peregrine's fraudulent transactions and made $5.2 million selling Peregrine stock while he was aware of or aiding fraud at the company, according to the Securities and Exchange Commission.

After a brief hearing before U.S. District Judge Thomas Whelan in San Diego, he was released on $75,000 bond. No sentencing date was set. The SEC filed a civil complaint Monday asking a federal judge to order Spitzer to repay all ill-gotten gains.

Senior executives at Peregrine urged Spitzer to "park" software with the company's resellers to generate bogus revenue that would help the software maker meet its forecasted revenue targets, the SEC said in its complaint. Federal officials and Spitzer's attorney declined to name the executives.

From December 1999 through March 2001, Spitzer generated $20 million worth of bogus revenue by recording phantom sales of the parked software, said Debra Patalkis, the SEC's lead attorney on the case. Resellers were told they owed nothing until the software was sold.

A company spokeswoman, MeeLin Nakata, declined to comment Monday.

In April, Matthew C. Gless, Peregrine's former chief financial officer, pleaded guilty to conspiracy to commit securities fraud and agreed to cooperate with federal investigators. Gless, 37, could be sentenced to as much as 15 years in prison at a Sept. 15 hearing.

Ilse Cappel, a former Peregrine treasurer, pleaded guilty last year to conspiring to commit bank fraud.

Peregrine revealed that it had overstated its revenue by $509 million from April 1999 through 2001. The company's reported losses of $1.54 billion actually were more than $4 billion.

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