James E. Koenig, the former CFO of disposal giant Waste Management, was ordered to pay over $4 million in penalties for committing 60 securities law violations over a five-year period.
U.S. District Court Judge Wayne R. Andersen entered the final judgment against Koenig following a two-day bench trial on remedies. A jury had originally returned a verdict against Koenig in 2006 after an 11-week trial.
The Securities and Exchange Commission alleged in its complaint that, beginning in 1992 and continuing into 1997, Koenig and others engaged in a scheme to falsify Waste Management's financial results, overstating profits by $1.7 billion. Waste Management allegedly manipulated its calculation of depreciation expenses by repeatedly extending the useful lives and overstating the salvage value of its trucks and containers.
The company also failed to write off impaired assets carried on its balance sheet, improperly capitalized interest and other expenses, understated its income tax expenses, under-accrued reserves, misapplied acquisition accounting principles, and improperly reversed reserves into income. The fraud resulted in a restatement in February 1998, the largest restatement in history at that time.
Previously, the SEC reached settlements with Waste Management auditors Arthur Andersen, and four of its former partners. Settlements also were reached in litigation with the founder and four other top officers of Waste Management.
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