Gerhart May Face Trial In Sirena Case
Sirena Apparel Group’s former chief financial officer Richard Gerhart, who was set this week to enter guilty pleas for his involvement in a Sirena-related securities fraud case, may have to go to trial after a federal judge decided there were too many unresolved issues pertaining to Gerhart’s admissions.
Gerhard intended to follow the action of former Sirena chief executive officer Maurice “Corky” Newman who last week pleaded guilty three counts of conspiracy, making false statements to the Securities and Exchange Commission (SEC) and circumventing accounting controls, but Gerhart had issues about admitting to fraudulent activities. Judge Dickran Tevrizian set a sentencing date for Newman last week, but earlier this week ordered Gerhart’s case to proceed at trial on May 8 in Los Angeles federal court.
Gerhart and Newman were charged last fall with illegally “holding open” the company’s third quarter of 1999 to reflect falsely inflated revenues and earnings. They were charged with delaying computer clocks until the quarter reflected positive results estimated by several Wall Street analysts.Additionally, they were accused of lying to the SEC and several analysts who later recommended “buys” of Sirena stock to clients.
In order to accept Gerhart’s guilty pleas to nine counts of securities fraud and conspiracy, Tevrizian said he needed an unequivocal plea from Gerhart, rather than to pick and choose his admissions. Gerhart is facing fines of up to $8.2 million and prison time of up to 85 years if convicted though legal experts say lengthy prison terms are rare in accounting cases. Prosecutors said they will be seeking restitution for Sirena shareholders. Gerhard is also facing fines and exclusion from working as an officer for a public company in a pending case involving the SEC.
