Securities: Ex-Gateway Officials Found Liable for Securities Fraud

The Securities and Exchange Commission has ruled that four years after two former Gateway Inc. executives were first accused of manipulating earnings, the men can be held liable for violating fraud and record-keeping laws and for making false statements. Gateway former Chief Financial Officer John J. Todd ad former Controller Robert D. Manza are believed to have participated in a scheme that booked false sales and relied increasingly on loans to customers in order to close the gap between Wall Street's expectations and actual results. Randall R. Lee, the director of the SEC's Pacific regional office in Los Angeles, said that "the desire to meet Wall Street analysts' expectations is no excuse for accounting tricks and other deceptive practices."

Ex-Gateway executives found liable in accounting fraud

Gateway fired the two men in early 2001 and the company is not named in the current case. The SEC says that the accounting irregularities that Todd and Manza perpetuated inflated revenue by 6.5% or $154 million during the third quarter of 2000. The third defendant in the case, former Gateway Chief Executive Jeffry Weitzen, was cleared of securities fraud allegations last year.