Former Tyco exec settles with SEC as two others charged

[JURIST] Former Tyco [corporate website; JURIST news archive] executive Richard "Skip" Heger reached a $450,000 settlement on financial reporting and record-keeping charges, the US Securities and Exchange Commission announced [press release] Thursday. The charges are connected to a fraud case in which Tyco agreed to pay a $50 million civil penalty [JURIST report] and a $1 disgorgement fee for fraudulent accounting procedures used between 1996 through 2002. Heger, who at the time was in charge of the company's fire and security services division finances, was accused of approving financial results that he knew, or should have known, were inflated; he reached the settlement without entering a plea on the charges. Two other former executives, Richard Power and Edward Federman, were charged with fraud in overstating Tyco's operating income by hundreds of millions of dollars through the use of a sham transaction. Reuters has more.

The April settlement allowed Tyco to avoid admitting any of the allegations [SEC press release] in the SEC's complaint [PDF, text]. According to the SEC, Tyco executives inflated key figures - including its operating income by more than $567 million and its cash flow by $719 million - in official reports to the SEC. Former Tyco CEO Dennis Kozlowski and former CFO Mark Swartz were found guilty of looting the company and its shareholders out of more than $150 million in unauthorized personal compensation, and have been sentenced to prison [JURIST report] for 8 to 25 years. The company still faces a likely onslaught of shareholder litigation, which analysts predict could cost the company up to $4 billion.



 

About Paper Chase

Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

© Copyright JURIST Legal News and Research Services, Inc., 2013.