Judge Rejects Jury's Verdict in SEC Fraud Case Against Former CFO of Gateway Computers
Today, U.S. District Judge Roger T. Benitez of San Diego, California threw out all fraud charges against former Gateway Computers executives, John Todd and Robert Manza, in an SEC civil enforcement action filed in 2003. The ruling came twelve weeks after a jury found Todd and Manza liable. Post-trial motions convinced the Court that the SEC's evidence was insufficient to support the verdicts.
The Court rejected the SEC's demands for a permanent injunction, disgorgement of salary by Todd and a permanent officer and director bar. Instead, Todd was ordered to pay $16,500 as a civil monetary penalty for an accounting error in a minor transaction in Q3 2000. The transaction recognized revenue from a vendor before it was fully received by Gateway. Its impact was less than 1% of Gateway's quarterly revenue.
John Todd appreciates how the judge, in 27 pages, scrutinized difficult accounting issues to conclude that Todd acted appropriately as Gateway's CFO and without any intention to deceive the public. "There were accounting disagreements. I'm not an accountant. My family and I are grateful that the judge understood what the jury did not."
Todd was represented by attorneys from Sheppard Mullin Richter & Hampton LLP in San Diego, California.
About Sheppard Mullin Richter & Hampton LLP
Sheppard Mullin is a full service AmLaw 100 firm with 490 attorneys in 10 offices located throughout California and in New York, Washington, D.C. and Shanghai. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Founded in 1927 on the principle that the firm would succeed only if its attorneys delivered prompt, high quality and cost-effective legal services, Sheppard Mullin provides legal counsel to U.S. and international clients. Companies turn to Sheppard Mullin to handle a full range of corporate and technology matters, high stakes litigation and complex financial transactions. In the U.S., the firm's clients include more than half of the Fortune 100 companies.