TELECOMMUNICATIONS SEC charges Lucent, execs with fraud

Lucent Technologies agreed to a $25 million fine.
WASHINGTON (AP) -- Lucent Technologies Inc. and nine former and current executives have been charged by federal regulators with conducting a $1.1 billion accounting fraud replete with hidden deals with customers and postdated documents.
The Securities and Exchange Commission fined the company $25 million in a settlement Monday, saying the telecom equipment maker failed to cooperate fully in the agency's investigation of its accounting.
The SEC also charged a former official of Winstar Communications with securities fraud and aiding and abetting Lucent's alleged violations of securities laws in the accounting irregularities.
In a civil lawsuit filed in federal court in Newark, N.J., the SEC alleged that Lucent "fraudulently and improperly" booked some $1.1 billion in revenue in 2000.
The executives, pushing to increase revenue, meet sales targets and reap sales bonuses, failed to disclose incentives that Lucent gave customers to induce them to buy its products, the SEC said.
Industry slump
Lucent's alleged accounting violations came during the start of the telecom industry slump, when pressure on sales executives intensified. After spectacular growth throughout the late 1990s, the company's fortunes reversed -- forcing massive layoffs, sales of parts of its business, and quarter after quarter of hefty losses.
Several other big telecom companies, including Global Crossing and Qwest Communications, are still under investigation for alleged improper accounting.
In the case of Lucent customer Winstar, the SEC alleged that former Lucent sales executive William Plunkett and David Ackerman, a former Winstar executive vice president, engaged in a scheme that led to Lucent's prematurely booking $125 million in revenue from a software licensing deal with Winstar. The scheme included postdating letters documenting agreements between the two companies, the SEC said.
Plunkett agreed in a settlement with the SEC to pay a $110,000 civil fine. Ackerman is contesting the SEC's allegations.
Lucent, based in Murray Hill, N.J., neither admitted nor denied wrongdoing in its settlement with the SEC. The company, created in 1996 when it was spun off from AT & amp;T, was not required to restate its earnings. It did agree not to commit future such violations.
In the fall of 2000, Lucent voluntarily informed the SEC about the accounting problems.
Settlements
Three of the former Lucent executives agreed to settle the allegations without admitting or denying the allegations. The three former sales executives -- Plunkett, Deborah Harris and Vanessa Petrini -- are paying a total $270,000 in civil fines. In addition, Petrini agreed to repay some $109,000 in compensation she received as a result of the alleged misconduct.
The other seven individuals are disputing the SEC's allegations, and their cases will be pursued in court.