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Canada Crime The Courts News

Former Nortel Execs Await Corporate Fraud Ruling 59

Posted by samzenpus
from the day-of-reckoning dept.
An anonymous reader writes "Three former Nortel executives accused of orchestrating a widespread multimillion-dollar fraud will learn their fate in Toronto on Monday, nearly a year after one of the largest criminal trials in Canada's corporate history began. Ontario Superior Court Justice Frank Marrocco is set to rule on whether ex-CEO Frank Dunn, ex-CFO Douglas Beatty and ex-controller Michael Gollogly manipulated financial statements at Nortel Networks Corp., between 2002-2003. The men, who each face two counts of fraud, are accused of participating in a book-cooking scheme designed to trigger $12.8 million in bonuses and stocks for themselves at the once powerful Canadian technology giant."
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Former Nortel Execs Await Corporate Fraud Ruling

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  • One of the execs (Score:5, Interesting)

    by Anonymous Coward on Monday January 14, 2013 @06:05AM (#42580339)

    One of the execs got rid of ALL of their stock two days before it tanked.

    Now, if your daughter is going to start at an Ivy League school and you need a few hundred grand, that may just be co-incidence.

    But I don't think that happened.

    • by durrr (1316311) on Monday January 14, 2013 @06:39AM (#42580411)

      Of course its just coincidence.
      We should free these poor, innocent and, more importantly, rich men and pay them $450 million each of taxpayer money to compensate for the terrible suffering and stain of reputation that the legal system have wrought upon them.

      • Yep, it's like the kid who kills their parents and says to the judge "Your honor, have mercy on me since I'm an orphan!" Why, shouldn't we be merciful to these poor unemployed high level execs since their company went kaput? The fact that their company went kaput because of their shenanigans and they played with the factors and manipulated things to extract so much money out before crashing and buring should have nothing to do with it!!! It's like Bain Capital. Why Mitt was just plain ol' smart coming in
      • by Anonymous Coward

        You taking a page out of Mulroney's book?

        Joke of the day: he got to *keep* the 30M.

      • by arth1 (260657)

        Of course its just coincidence.
        We should free these poor, innocent and, more importantly, rich men and pay them $450 million each of taxpayer money to compensate for the terrible suffering and stain of reputation that the legal system have wrought upon them.

        It's our (the people, through its representatives) job to show that it was not a coincidence. The onus is, as it should be, on the accuser.

        And yes, if we cannot do that, we should indeed compensate them for the ten years they've gone through, whether we think they did it or not, and no matter what our loathing is for money grabbing suits. We must not allow Justitia to uncover her eyes and become biased - it's never worth it.

        I hope that everyone that's guilty is found guity, and given the appropriate sente

    • Re:One of the execs (Score:5, Interesting)

      by Dexter Herbivore (1322345) on Monday January 14, 2013 @06:41AM (#42580413) Journal
      Whatever penalty they end up with, it had better include a financial component covering their gains plus a substantial penalty on top as a minimum. I hold no faith in justice systems to impose a serious enough jail term for this.
      • by coastwalker (307620) <[moc.liamtoh] [ta] [reklawtsaoca]> on Monday January 14, 2013 @06:49AM (#42580433) Homepage

        Shame about all the people who used to work for the company who lost their pensions too because it was mostly invested in Nortel stock.

        Still you should be thankful as you live out your last years in a trailer that the problem of over regulation by the government is being valiantly fought over by Fox news and the WSJ.

        Unfettered wealth creation by the super rich for the super rich should never be held back!

      • by rHBa (976986) on Monday January 14, 2013 @07:45AM (#42580571)
        Assuming they are found guilty they should be hit with massive fines AND jail sentences.

        If Aaron Swarts can be threatened with 30 years and massive fines for essentially a victimless crime...
        • by MickyTheIdiot (1032226) on Monday January 14, 2013 @08:54AM (#42580773) Homepage Journal

          I don't know what the odds of this are in Canada, but in the U.S. the odds of corporate execs being held accountable are almost nil.

          • by Thorodin (1999352)
            Depends on how big a 'stink' the corp. exec causes. Enron and Global Crossings come to mind.
          • by Anonymous Coward

            I don't know what the odds of this are in Canada, but in the U.S. the odds of corporate execs being held accountable are almost nil.

            The odds are actually worse in Canada. See: this Nortel case taking an entire decade before it even came to trial. Or the various securities and similar ombudsmen in Canada that always accept a small fine instead of going to court (which could potentially land a businessperson in jail).

          • by Raenex (947668)

            I don't know what the odds of this are in Canada, but in the U.S. the odds of corporate execs being held accountable are almost nil.

            Hello from the future. They were acquitted [ctvnews.ca] of all charges.

      • by phorm (591458)

        A bit of good ol'-fashioned jail-time would be nice too. Unfortunately other things such as flogging etc aren't allowed these days.

        • A bit of good ol'-fashioned jail-time would be nice too. Unfortunately other things such as flogging etc aren't allowed these days.

          Bring back the stockades [knightsedge.com]!

    • Re: (Score:3, Interesting)

      by arth1 (260657)

      One of the execs got rid of ALL of their stock two days before it tanked.

      Now, if your daughter is going to start at an Ivy League school and you need a few hundred grand, that may just be co-incidence.

      But I don't think that happened.

      Statistics tell us that it will happen by chance, every so often - depending on how many execs the company has, and how often they sell stock on average, this might be quite likely to happen by chance. For 100+ execs with an average sell-off time of ~2 years, it's more likely than not than it happens by chance to one of them right before a company tanks.

      Sure, it's suspicious, but we don't convict people over that. What we need to do is prove that it was not chance.

      And in far less time after the crime. Wh

      • by Anonymous Coward on Monday January 14, 2013 @08:09AM (#42580633)

        If they'd sold 20% of their stock, then it would not be more than mildly suspicious.

        But when the market is rising, who sells ALL their stock?

        Nobody.

        And if that is two days before the stock tanks?

        It's rather like complaining "they could have died of a heart attack at the same time, so you can't label the 'shooting a gun at them' as anything more than suspicious".

        • by arth1 (260657)

          But when the market is rising, who sells ALL their stock?

          Nobody.

          I've done that before. I'm sure many others here have too. Sometimes you don't have the luxury of waiting, sometimes you don't want the gamble, and sometimes you have to put in your sell order well in advance.

          And if that is two days before the stock tanks?

          So? Not all execs were privy to information that the stock would tank. This has to be shown before conclusions can be drawn. You see the effect and can only guess at the cause unless you have evidence. And we don't (or shouldn't) put people in prison based on our ability to guess.

          It's rather like complaining "they could have died of a heart attack at the same time, so you can't label the 'shooting a gun at them' as anything more than suspicious".

          No, the odds are

      • The way that corporate execs (as a group) are manipulating the government and not being held accountable for their fraudulent activity, it would probably be HEALTHY for some people on the streets with torches and pitchforks. The fact we see NONE of that is more concerning than any concern about "mob mentality." If you don't see the corporate malfeasance we're living with right now then you're a CEO worshiper.

        • by arth1 (260657)

          The way that corporate execs (as a group) are manipulating the government and not being held accountable for their fraudulent activity, it would probably be HEALTHY for some people on the streets with torches and pitchforks. The fact we see NONE of that is more concerning than any concern about "mob mentality." If you don't see the corporate malfeasance we're living with right now then you're a CEO worshiper.

          So. MickyTheIdiot, not only do you advocate lynch mobs, but you want to pass judgment on me too?

          For what it's worth, I'm a socialist, who thinks that the stock market and corporate system is inherently evil - not necessarily the individuals, but the system. If you pour blood into the bay, you get sharks. That isn't the sharks' fault, and amassing a mob to hunt them isn't going to solve the problem, only make you look like a tool.

    • by rtaylor (70602)

      Executive trades are typically public and large shareholders do watch them and will respond to them.

      • by arth1 (260657)

        Executive trades also typically has to be put in a long time in advance, precisely to reduce suspicions that it was based on insider knowledge.

    • by msauve (701917)
      "One of the execs got rid of ALL of their stock two days before it tanked."

      References? Nortel didn't "tank" in a single day, it happened over much of 2001. If an exec was in the habit of immediately exercising, then selling options as they vested, or before they expired, it might not be unusual for them to sell "all" of their stock holdings on a regular basis.
  • I was in Nortel (Score:4, Interesting)

    by pbjones (315127) on Monday January 14, 2013 @08:23AM (#42580671)

    They would not pay the staff bonuses, that would be bad for shareholders, but the bosses get their bonus, and jail time, I hope.

  • I await... (Score:2, Interesting)

    by Anonymous Coward

    I await roman_mir or one of his sock puppets posting outraged comments over this "travesty" of justice and affront to "freedom" to perpetrate fraud. And mob rule, etc. etc.

  • Sympathy (Score:4, Interesting)

    by Charliemopps (1157495) on Monday January 14, 2013 @09:32AM (#42580963)

    They should go to jail... but...

    I used to know some people in this sort of situation. They business wasn't nearly as big, but they'd run into some financial trouble and if earnings were bellow some arbitrary number, it would trigger a wave of financial ruin on the company. In the case that I was parifrialy aware of (I had a family member working there) They were getting free water, sewer, etc from the city as long as their revenue was X amount. They were short by less than a tenth of a percent. There were also loans who's interest rates would go up. The end result was, if they published the numbers they had, the company was going down. I knew a lot of the people involved and they were very torn up about the whole thing. There were around 1000 people that would lose their jobs, the entire thing would be a mess. So they lied. The company went on to make it out of their financial troubles.

    I don't agree with what happened. But there's a lot more to these stories than stock options and greed. Not a single person I knew in that situation was talking about any of that. They were talking about a single earnings number destroying their business and the welfare of the people that worked for them. The moral of my story isn't that you should do this sort of thing... it's that the motives of the people behind this stuff aren't always sharks trying to score money. Some of them really care about their business and the people working there. I don't know if that's the case here, but food for thought or something.

    • Don't even start to defend these guys.

      These guys were responsible for 90,000 people losing their jobs and there pensions through outright illegal practices running Nortel.

      These are millionaires that tried to over-inflate the value of their company to get more money, not just some hard working guys doing what it took to keep the company profitable and afloat.

      Don't pull the "lets put on their other guys shoes" empathetic bullshit here. You couldn't afford the shoes these guys were putting on their feat rippi

  • It's pretty clear that this case isn't so much about the three defendants as it is about the vultures circling wanting what is left of the Nortel carcass for themselves. To gorge on that carrion someone has to be shown to be guilty. The problem is even the judge is having problems seeing guilt when the accounting practices were accepted by the auditors.

    What isn't clear to me, is how all this might affect the pensioners and former employees claims. They are the ones who really got screwed by this whole mess.

  • by Anonymous Coward

    Free, yes they're free:
    http://www.ctvnews.ca/canada/former-nortel-execs-acquitted-in-multimillion-dollar-fraud-case-1.1112930

  • Three top Nortel Networks Corp. executives accused of defrauding the company and its investors were acquitted in a Toronto courtroom today, making them free men.

    On the CBC's site [www.cbc.ca].

  • Unless I'm missing something, why would such a relatively small amount make any difference to a multi-billion dollar corporation?

Don't steal; thou'lt never thus compete successfully in business. Cheat. -- Ambrose Bierce

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