A federal jury on Thursday found that two former top officials at Gateway misled investors by inflating the struggling computer maker’s revenue in 2000 as part of a scheme to “close the gap” between Wall Street’s expectations and the company’s actual performance.
John Todd, Gateway’s former chief financial officer, and Robert Manza, former controller, were found liable for fraud, making false statements to accountants and other securities abuses.
The verdict marked the latest twist to a case that began in 2003, when the Securities and Exchange Commission accused the two men, together with Jeffrey Weitzen, Gateway’s former chief executive, of manipulating revenues at the company.
The charges against Mr Weitzen were thrown out last year.
Robert Rose, attorney for Mr Todd, said his client would ask the federal judge hearing the case to reject the jury verdict before he enters a final judgment in April.
Mr Manza’s attorney could not be reached on Thursday.
The jury found that Mr Todd and Mr Manza inflated revenues at the company through a “variety of improper and extraordinary transactions”.
Some of the transactions that were found to have been manipulated were worth millions of dollars. But in at least one case, a transaction contributed only a penny per share to the company’s earnings, according to the SEC.
“That penny was the penny that allowed them just to meet Wall Street expectations,” said Randall Lee, the SEC’s Pacific regional director.
Mr Lee said the Gateway case showed that “even small accounting tricks and deceptive practices can be fraudulent and even material to investors.”