Gateway ex-CEOs settle fraud charges

Both were accused of misreporting to meet analysts' expectations

Two former chief executives of PC manufacturer Gateway will pay penalties totaling £240,000, after coming to a settlement with the US financial regulator over fraud charges around accounting irregularities at the company over a decade ago.

Gateway suffered a heavy downturn with the implosion of the dotcom bubble and has since been acquired by Taiwan-based computer firm Acer.

Former CEO Jeffrey Weitzen and former controller Robert D. Manza both consented to final judgements entered against them on January 25 following fraud charges. While not amounting to an admission of guilt on their parts, Weitzen is now liable to pay total fines of $270,000 (£171,00) and Manza $110,000 (£70,000), respectively. In addition to the fines, Manza consented to a fine year bar from acting as an officer or director of a public company.

Both were accused by the SEC of misreporting the company's financial condition in the third quarter of 2000 in order to meet analysts' expectations for earnings and revenue. This included falsely recording $47.2m (£29.9m) in revenue from a one-off sale of assets. Another allegation was that Manza along with co-defendant John J. Todd, former CFO of Gateway, recorded $21m (£13.3m) from an incomplete sale of computers.

They neither admit nor deny the allegations.

The settlement comes after a decade of legal wrangles that saw the pair found guilty by jury on fraud counts, only for the judgement to be overturned by a judge on appeal. This was then appealed by the SEC.

The case involving Todd is still pending.

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