Ex-Sirena CFO Pleads Guilty to Fraud
Richard A. Gerhart, the former chief financial officer for swimwear manufacturer Sirena Apparel Group Inc., has been given a sentencing date of Aug. 13 in Los Angeles federal court after pleading guilty to tampering with Sirena’s third-quarter earnings statement in 1999, among other charges.
Gerhart, 49, of Irvine, Calif., faces imprisonment of up to 25 years and fines of up to $8.2 million under federal guidelines, though defendants in accounting cases like these rarely see long, if any, jail terms. He and ex-Sirena CEO Maurice B. “Corky” Newman were indicted last fall for “holding open” the third-quarter of 1999 to reflect $4.4 million in additional revenues beyond the close of the quarter. This was done by resetting internal computer clocks until results reflected estimates made by Wall Street analysts, thus keeping Sirena in a favorable light to investors.
Gerhart this week pleaded guilty to one count of conspiracy, two counts of securities fraud, one count of making false statements to the Securities and Exchange Commission (SEC), four counts of falsifying books and records and one count of circumventing accounting controls.
The former CFO attempted to plead guilty to the charges last week but Judge Dickran Tevrizian rejected the pleas and set the case for trial because Gerhart objected to certain aspects of the indictment pertaining to fraud. This week his attorney filed a statement of facts clarifying his admissions and asked the judge to reconsider.
Gerhart may face tougher penalties than Newman since he did not reach a plea agreement with federal prosecutors. Newman faces fines of $2.25 million and 25 years in prison when he is sentenced on June 25.
Gerhart also faces additional penalties in a pending SEC case, which may also bar him from serving as an officer for any public company. Newman has already settled his SEC case by paying a $30,000 fine. —Robert McAllister
