Gemstar exex charged

Boylan, Orlick, Waggy added to SEC civil complaint

Three more former Gemstar-TV Guide executives have been charged with securities fraud in the Securities and Exchange Commission’s civil case concerning accounting irregularities at the print and online program guide company.

Former co-president Peter Boylan, former general counsel Jonathan Orlick and former TV Guide Inc. chief financial officer Craig Waggy were added to an SEC civil complaint alleging the execs participated in Gemstar’s “widespread and complex scheme to inflate its licensing and advertising revenue and to mislead investors about the company’s true financial performance.”

The SEC’s action, filed in United States District Court in Los Angeles, amends the commission’s June complaint against Gemstar’s former CEO and founder, Henry Yuen, and former CFO, Elsie Leung. The suit seeks permanent injunctions, civil money penalties and disgorgement of ill-gotten gains (including salaries, bonuses and any proceeds from the sale of stock during the fraud) and seeks to bar the execs from serving as officers or directors of a public company.

Boylan, Orlick and Waggy are charged with securities fraud, falsifying Gemstar’s books and records, and aiding and abetting Gemstar’s reporting and record-keeping violations of the federal securities laws. The amended complaint also charges Orlick with lying to Gemstar’s auditors.

“These new charges reveal that the betrayal of the investing public by Gemstar’s management was carried out not just by the former CEO and CFO, but with the participation and assistance of others in the executive suite,” said Randall R. Lee, regional director of the SEC’s Pacific regional office.

“It’s even more disturbing that two of the defendants were also members of Gemstar’s board, and that one of them was the general counsel of the company.”

The amended complaint argues that between June 1999 and September 2002, Gemstar overstated sales by around $250 million through a host of illegal schemes including improperly reporting licensing and advertising revenue from expired, disputed or non-existent agreements. Gemstar reported ad revenues from TV Guide when Gemstar had not run the advertising.

The accusations could yet cast aspersions on majority owner News Corp. and previous equity owner Liberty Media, since all three execs were employed indirectly by Liberty or News Corp.

Boylan earlier this month stepped down from an executive position with John Malone’s Liberty Media, which he joined in 2002 to run Liberty Broadband Interactive Television.

It’s still unclear whether the SEC accusations will be followed by criminal charges by the Justice Dept. But if the SEC can prove liability, Justice may have a case, say legal experts.

In a statement responding to the amended civil suit Monday, Gemstar-TV Guide Intl. reiterated that none of the individuals named in the SEC filing currently serves Gemstar-TV Guide in any capacity.

Since a management restructuring and corporate governance changes in November 2002, “the company’s current management has worked closely in cooperation with the SEC in connection with this investigation,” said Gemstar. “The company believes that it has resolved its past accounting issues and has taken significant steps toward the resolution of associated regulatory issues. Further, the new management team is implementing revised operating plans across the company.”

Want to read more articles like this one? SUBSCRIBE TO VARIETY TODAY.
Post A Comment 0

Leave a Reply

No Comments

Comments are moderated. They may be edited for clarity and reprinting in whole or in part in Variety publications.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

More Biz News from Variety

Loading