Former Top Symbol Exec Expected To Be No Show In Court

Robert Nardoza, spokesman for the U.S. Attorney's office, said Symbol's former president and CEO, Tomo Razmilovic, would probably be a no-show to the Thursday hearing. Nardoza said Razmilovic's attorney, David Nachman, called Wednesday to report his client has no plans to appear at a scheduled indictment in U.S. District Court in Central Islip, New York.

"We have been notified by his attorney that he is not going to show, but the court has decided to keep the date on the calendar," said Nardoza. "We don't expect him to appear, but we'll see what happens."

Nardoza said the U.S. Attorney's office has reported Razmilovic as a fugitive from justice to Interpol and issued a warrant for his arrest in the United Kingdom, the last place authorities believe Razmilovic was living.

Nachman did not return calls for comment Wednesday.

Meanwhile, Leonard Goldner, Symbol's former general counsel and executive vice president, pleaded innocent this week to tax evasion, wire and mail fraud charges related to a stock option scheme aimed at bolstering the profits of top executives and illegally minimizing their tax obligations at the expense of Symbol, according to U.S. District Court documents. He was released on a $500,000 secured bond, according to U.S. District Court documents.

In about May 2002 Razmilovic "resigned" (though Symbol later reported it had fired Razmilovic) as Symbol's president and CEO, and reportedly moved to London. He had worked for Symbol for 13 years, serving his last two as president and CEO. In 2001, Forbes named Razmilovic at no. 104 in its annual list of highest paid executives during 2001. His compensation listed as part of that Forbes report includes salary, bonus, stock gains and other compensation that totaled nearly $13 million.

The Holtsville, N.Y. mobile products vendor, meanwhile, agreed last week to pay approximately $138 million in penalties to settle charges of accounting fraud with the Securities and Exchange Commission, the U.S. Attorney's Office and shareholders.

That figure includes SEC and U.S. Attorney agreements for Symbol to pay a $37 million penalty, payable to a restitution fund for Symbol investors, and $3 million to the U.S. Postal Inspection Service Consumer Fraud Fund. It also includes a settlement of private shareholder litigation, subject to court approval, of $98 million, composed of $1.75 million in cash and $96.25 million in stock.

Other former Symbol executives, including Kenneth Jaeggi, Brian Burke, Michael DeGennaro, Frank Borghese, Christopher DeSantis, James Heuschneider, pleaded not guilty last week to SEC charges they participated in a "long-lived pervasive accounting fraud scheme designed to ensure Symbol could consistently report that its quarterly revenues and earnings met the estimates of stock analysts when, in fact, Symbol's true financial performance often fell short of the estimates," Each was released on a $500,000 secured bond.

The indictment seeks, among other things, a forfeiture money judgment against all of the defendants totaling about $74 million as well as the forfeiture of substitute assets consisting of 12 real estate properties worth several millions dollars, for which the U.S. Attorney's office charges they are jointly liable.

The SEC charged that from at least 1998 until early 2003, Symbol and its former executives engaged in numerous fraudulent accounting practices, including channel stuffing and other financial misconduct that led to cumulative net revenue of more than $230 million and more than $530 million on its pretax earnings.

Among several fraudulent techniques alleged in the 87-page federal indictment of former Symbol executives, the U.S. Attorney's office alleges systematic channel stuffing to overstate Symbol's quarter revenue and earnings.

The federal indictment alleges financial transactions that claimed to sell products to various VARs or distributors at or near the end of every fiscal quarter -- even though the VARs and distributors had no firm obligation to pay for the products they allegedly purchased, and often could not afford to pay for them, according to the indictment.

The VARs and distributors (not named in the indictment) were allegedly known at the company as "Friends of Frank," according to the federal indictment, because they were companies with whom Borghese had developed a special relationship that fostered the channel stuffing activity.

For instance, according to the federal indictment, at the end of the first, second and third fiscal quarters of 2000, Symbol allegedly instructed a South American-based distributor (not named in the indictment) to place multi-million dollar orders for products it didn't need.

According to the indictment, Symbol allegedly never shipped the products " they were instead stored in Symbol's New York warehouse. Symbol and the distributor then allegedly agreed that the distributor had no obligation to pay for the warehoused products but could "exchange" them at no cost when it placed new orders for products it needed, according to the federal indictment.

These terms were allegedly hidden from Symbol's outside auditors and Symbol allegedly went on to fraudulently recognize and report more than $16 million in revenue from these transactions, according to the federal indictment.

Five former Symbol executives have previously pleaded guilty, according to U.S. District Court documents, to conspiracy charges arising out of the alleged accounting fraud scheme including Robert Korkuc, Robert Asti, Gregory Mortenson, Robert Donlon and James Dean.

U.S. District Court Justice Leonard Wexler last week declared the larger case "complex for speed trial purposes" and adjourned for status conference scheduled to be held on Sept. 23, 2004.