|
 |
| 2002 News and Press Releases |
|
|
SETTLEMENT ARCHIVED:
Sunbeam Ex-CEO 'Chainsaw Al' Dunlap Settles SEC Case
By: Neil Roland and Judy Mathewson -- with reporting by Robert Schmidt in Washington
Bloomberg News. September 4, 2002
_________________________________________________________________________
EXCERPT: Former Sunbeam Corp. Chairman and Chief Executive Officer Albert Dunlap agreed to pay $500,000 to settle Securities and Exchange Commission charges that he defrauded investors by inflating sales at the largest U.S. maker of small appliances. Dunlap, 65, nicknamed "Chainsaw Al" after firing thousands of workers to try to revive different companies, sought to inflate Sunbeam's earnings to make it more attractive to prospective buyers and increase his own potential gains, the SEC alleged. "Dunlap was the guiding presence at Sunbeam when it did a panoply of things wrong," SEC assistant enforcement director Richard Sauer said in an interview. A number of Sunbeam's accounting irregularities, which included using " cookie-jar" reserves to exaggerate the company's turnaround from 1996 to 1998, have "echoes" in more recent accounting cases at Enron Corp. and WorldCom Inc., Sauer said. Sunbeam's auditor was Arthur Andersen LLP, which also audited the books at Enron and WorldCom. Dunlap, who achieved celebrity status after writing a best- selling book about his career, failed to disclose that Sunbeam offered discounts to sell merchandise, such as barbecue grills, that would have been sold in later periods, the SEC alleged. The company's use of accounting reserves increased Sunbeam's reported loss for 1996 and inflated income by $60 million in 1997, "contributing to the false picture of a rapid turnaround in Sunbeam's financial performance," the SEC said. Dunlap's attorney, Frank Razzano, said the settlement will allow Dunlap "to pursue his retirement and therefore is a welcome outcome." Without admitting or denying wrongdoing, Dunlap also agreed to be barred from working as an executive at a public company. Last month, Dunlap agreed to pay $15 million to settle a class-action shareholder lawsuit that made similar allegations. Sunbeam sought bankruptcy protection in February 2001, citing $3.2 billion in debt, some of it linked to Dunlap's acquisitions. Dunlap, who started in July 1996, was fired in June 1998.
|
|
|
