October 27, 2004
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CONTACT: |
Robert Nardoza |
United States Attorney's Office |
(718) 254-6323 |
PRESS
RELEASE
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Former General Counsel of Symbol Technologies Pleads Guilty to Conspiring to Obstruct the Internal Revenue Service in the Collection of Income Tax |
ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York and a member of the Presidents Corporate Fraud Task Force, ROBIN M. DALGLEISH, Inspector-in-Charge, New York Division, U.S. Postal Inspection Service, and MICHAEL J. THOMAS, Special Agent-in-Charge, Internal Revenue Service - Criminal Investigation, New York, announced that the former general counsel of Symbol Technologies, Incorporated, LEONARD GOLDNER, pleaded guilty today to conspiring to obstruct the Internal Revenue Service in the computation, assessment and collection of income tax. This conspiracy arose out of a scheme orchestrated by GOLDNER in which he and other senior executives at Symbol fraudulently exploited Symbols stock option plans to enrich themselves and illegally minimize their tax obligations at the expense of Symbol. GOLDNER entered his guilty plea before United States Magistrate Judge William D. Wall at the U. S. Courthouse in Central Islip, New York. Under the terms of the plea agreement, GOLDNER faces up to five years imprisonment and a maximum fine amounting to twice the loss he caused, or $250,000, whichever is greater. GOLDNER has also agreed to forfeit to the government $2 million, representing the proceeds of his crime. (1) Symbol is the eight largest public company on Long Island, and one of the worlds leading manufacturers and distributors of wireless and mobile computing and bar code reading devices and other networking systems. On June 3, 2004, the government announced the unsealing of an indictment containing charges against GOLDNER arising out of the stock options scheme. The indictment also charged seven other top-level former executives at Symbol for their participation in a long-lived, pervasive accounting fraud scheme designed to ensure that Symbol could consistently report that its quarterly revenues and earnings met the estimates issued by professional stock analysts when, in fact, Symbols true financial performance often fell short of the estimates. (2) At todays guilty plea proceedings, GOLDNER admitted that he orchestrated a stock option exercise scheme in which he and certain key executives were afforded a "look-back" period of up to 30 days to choose an advantageous price for the exercise of their stock options. With respect to those executives who paid cash to acquire Symbol stock through the exercise of their stock options, GOLDNER generally permitted them to falsely designate, as the exercise date, the date with the second-lowest market price that occurred during the "look-back" period. By choosing a date with a lower market price, the profit or "gain" realized by the executive on the acquisition of the stock was substantially less than it would have been if the individual had used the market price from the actual date of the stock option exercise. Because the Internal Revenue Service determines income tax based on the size of the gain, the participating executives, including GOLDNER, were able to substantially lessen the tax due for the exercise of their stock options. "As Symbols General Counsel, the defendant was required to ensure that this public company fully complied with the law," stated United States Attorney MAUSKOPF. "Instead, he repeatedly broke the law in order to enrich himself and several other top executives at the expense of Symbol, its investors and the taxpaying public. This stock option scheme demonstrates the corruption of the business culture the pervaded Symbol, infecting even its corporate leadership. We and our partners in the Corporate Fraud Task Force are committed to uncovering and prosecuting fraud schemes that corrupt companies and defraud investors." Ms. MAUSKOPF thanked the Securities and Exchange Commission for its assistance in the investigation. Postal Inspector-in-Charge KEZER stated, "General Counsel of large corporations and their officers are not above the tax laws. We follow the money and aggressively pursue corporations and their officers who violate the tax laws." Internal Revenue Service Special-Agent-in-Charge DALGLEISH stated, "Todays guilty plea by the defendant is a result of the cooperative efforts by the Presidents Corporate Fraud Task Force to ensure that those who scheme to defraud investors and short change the government in tax revenues are held accountable for their actions." The governments case is being prosecuted by Assistant United States Attorneys Eric Corngold, Geoffrey Kaiser, Matthew Levine, Richard Lunger and Special Assistant United States Attorney Craig Warkol of the United States Securities and Exchange Commission. |
The Defendant: |
LEONARD GOLDNER |
DOB: 6/18/47 |
Residence: Huntington, NY |
1. GOLDNER has also been charged in a related civil action filed by the United States Securities and Exchange Commission in the Eastern District of New York. |
2. GOLDNER is the first of these eight defendants to plead guilty to the charges set forth in the indictment. Previously, five other Symbol executives pleaded guilty to conspiracy charges that arose out of the accounting fraud scheme. |