(E S and S - Military Contractor) Ex-Financial Officer Accused of Fraud

[UpInArms]

Source: New York Times

ST. LOUIS, March 26 (AP) — Federal prosecutors on Monday accused the former chief financial officer for the military contractor Engineered Support Systems Inc. of backdating stock options without disclosing his actions and then making a false statement to investigators.

The former financial officer, Gary Gerhardt, 62, of St. Charles, Mo., faces a 10-count indictment that includes one count of falsifying books and records of a publicly traded company; 4 counts of making false statements in reports filed with the Securities and Exchange Commission; 2 counts of mail fraud; and 2 counts of wire fraud.

The indictment accuses Mr. Gerhardt and others of illegally backdating stock options on at least eight occasions from 1996 to 2002.

An assistant United States attorney, Michael Reap, said the practice diluted profits for shareholders and deprived the public of accurate information concerning the company’s earnings and compensation for its executives.

Read more: http://www.nytimes.com/2007/03/27/business/27options.html?ex=1332648000&en=1e4058f4cf036f51&ei=5088&partner=rssnyt&emc=rss