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| 2002 News and Press Releases |
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HEADLINE:
Finding Wrongs, Through The Prism Of Silicon Valley
By: Matt Richtel
New York Times. December 30, 2002
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EXCERPT: Seeking to mirror its aggressive pursuit of executives on Wall Street, the Justice Department is putting a new focus on Silicon Valley, pursuing managers of the technology boom who are suspected of crossing the line into securities fraud and insider trading. The United States attorney here is under pressure from Washington to mount prosecutions swiftly. The effort was punctuated last month by the indictment last month of Phillip E. White, the former chief executive of Informix, a database company that was based in Menlo Park, Calif., and has since been bought by I.B.M. Prosecutors assert that the company lied about its revenue, leading it to inflate the value of its stock by hundreds of millions of dollars. The government has also brought charges or received convictions in the last year against executives or employees at least nine high-technology companies, including Critical Path, the e-mail network company. But as federal law enforcement officials increase their scrutiny here, Valley executives say the effort may be more political than practical. And they say the government is unlikely to find extensive fraud at the Valley's most well known firms - the equivalent of Enron or WorldCom - but will instead make examples of smaller entrepreneurs. Other Silicon Valley executives, along with lawyers representing shareholder groups, say that the peculiarities of the high-tech business, particularly its emphasis on selling software and reliance on stock options, may provide fertile ground for aggressive prosecutors.
"The efforts are definitely intensifying," said Andrew C. Hruska, senior counsel to the deputy attorney general in Washington. Mr. Hruska said the California office had been charged with being "better and swifter" and bringing more cases. "We want more concentration on getting results," he said. "We don't want to rush anything, but it's important to work swiftly." Patrick Robbins, chief of the securities fraud section for the United States Attorney's Office for the Northern District of California, based in San Francisco, said the government had a number of executives under investigation. "They generally revolve around the computer industry, but they're not really dot-com bubble-type companies," Mr. Robbins said. He said the other common thread here and elsewhere in the country was the enormous pressure for companies to meet revenue and growth projections. "You can see evidence of it throughout the 90's and during the last two years," he said.
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