Prabhat Goyal, the former chief financial officer of software manufacturer McAfee Inc., was convicted on 15 counts of securities fraud last week.
According to the U.S. Attorney's Office in San Francisco, Goyal served as vice president and CFO of the company (formerly Network Associates), until an accounting scandal led to his departure in 2000. Goyal was convicted in connection with the false and misleading statements prosecutors said that he was responsible for in financial statements filed between 1998 and 2000 with the Securities and Exchange Commission.
McAfee agreed to pay $50 million in January 2006 to settle its own accounting fraud charges, ending a long-running investigation by the SEC. According to the SEC, for 1998 alone, the company overstated revenues by $562 million, and when the company announced in December 2000 that it would miss its quarterly revenue projection by $190 million, the news slashed over $1 billion from McAfee's market capitalization.
According to court documents, Goyal allegedly caused Network Associates to make payments to its distributors disguised as discounts, rebates and marketing fees to convince the distributors to engage in channel stuffing -- holding excess inventory, not returning unsold products and purchasing more products than the distributors could actually sell to customers during a quarter -- all actions which contributed to improper sales and earnings results.
Lawyers for Goyal said that he would appeal the ruling.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access