Washington, Nov 14: Three former top officials of computer maker Gateway were hit with civil fraud charges, accused of cooking the company's books to meet Wall Street earnings expectations, officials said. The Securities and Exchange Commission yesterday said those named in the complaint are Jeffrey Weitzen, the former chief executive of Gateway, John Todd, the former chief financial officer, and Robert Manza, Gateway's former controller.
Gateway meanwhile settled a separate SEC complaint related to the earnings manipulation.
"We are very pleased to put this issue from our past behind us," said gateway chairman Ted Waitt. "We are a completely new gateway, and bringing this issue to closure allows us to now focus completely on serving our customers."
The SEC said the three former executives were accused of "engaging in a fraudulent earnings manipulation scheme to meet Wall Street analysts' expectations, and for making false statements and concealing from the investing public important information about the success of Gateway's personal computer business, in the second and third quarters of 2000".
An SEC lawsuit, filed in federal court in San Diego, seeks antifraud injunctions, civil penalties, return of "ill-gotten gains," and orders barring the three from serving as officers or directors of public companies.
The complaint said the three misrepresented or failed to disclose that PC sales growth was declining and that only a small percentage of profit was associated with PC sales. Bureau Report