They were allegedly
aware that the company
booked false revenues
Two former sales vice presidents of Critical Path Inc., a San Francisco high-tech company, were criminally charged with insider trading in federal court Tuesday.
The charges in U.S. District Court in San Francisco against Jonathan Beck, 33, of San Francisco, and Kevin Clark, 37, of Pleasanton, follow guilty pleas by two other former executives earlier this year in a fraud investigation.
In February, former President David Thatcher pleaded guilty to conspiring to commit securities fraud by booking false revenue during the third and fourth quarters of 2000 in order to meet predicted financial results.
In April, former Vice President Timothy Ganley pleaded guilty to engaging in insider trading by selling stock in January 2001 at a time when he knew the company was executing illegitimate revenue deals and hiding expenses.
Thatcher and Ganley have not yet been sentenced.
In Tuesday's charges, Beck and Clark were also accused of insider trading by selling stock in January 2001 when they were allegedly aware that the company had been booking false revenues and that the fraud had not yet been revealed.
Beck was accused of selling more than $600,000 in Critical Path stock and Clark was accused of selling more than $350,000 worth.
The charges were filed by the U.S. Attorney's office. They carry a theoretical maximum sentence of 10 years in prison upon conviction, but the actual penalty, if the defendants are convicted, would be determined under federal sentencing guidelines.
Critical Path restated its revenues in April 2001, saying it overstated income by about $10 million in each of the third and fourth quarters of 2000. The company's stock price fell from $116 per share in March 2000 to less than $4 per share on Feb. 15, 2001.
The company, which provides e-mail and other communications services, has said the employment of all executives accused in the probe has been terminated and new management is in place.
Also today, the U.S. Securities and Exchange Commission filed a civil fraud and insider trading lawsuit against Clark and former Critical Path executive William Rinehart. The charges were settled at the same time the lawsuit was filed, the SEC said.