March 29, 2024

Ex-Nortel Executives’ Fraud Trial to Begin

Prosecutors contend that after Nortel suffered steep financial losses in the dot-com crash at the turn of the century, its postcrash bookkeeping was also fraudulent. On trial are Frank A. Dunn, Nortel’s former chief executive; Douglas C. Beatty, the former chief financial officer; and Michael J. Gollogly, the former controller. The three men were dismissed in 2004 and the company has since been largely broken up and sold.

All three men deny that they committed any fraud.

Nortel’s fall has spurred lingering resentment in Canada. Many of its shares were held by small investors who saw their value wiped out. The collapse also led to an important player in Canada’s technology sector’s coming under foreign control, even if many of the companies that bought Nortel’s assets, like Ciena of Linthicum, Md., maintain substantial operations staffed by former Nortel employees in Canada.

As is the custom in Canada, prosecutors will not publicly detail their case against the former executives until the trial begins in the Ontario Superior Court of Justice in Toronto. But their comments at pretrial hearings, and the charges themselves, indicate that the complex case largely rests on the government’s accusation that the three executives manipulated the company’s financial statements to create a slim and fictional profit. That profit, in turn, led to about $5 million in performance bonus payments to the three accused, prosecutors contend.

Brian H. Greenspan, one of the lawyers representing Mr. Gollogly, said that there are no allegations that the action of the executives caused the company’s collapse. Nortel filed for bankruptcy protection in January 2009.

“The trial has nothing to do with the demise of Nortel,” Mr. Greenspan said on Friday. “It has nothing to do with the bankruptcy; it has nothing to do with the investors who lost money during the fall of Nortel.”

He said that Mr. Gollogly had not manipulated the financial statements to obtain bonuses but “made an honest attempt to get the books in good order.”

He added, “It’s not as if a restatement means something is criminal.”

Gregory L. Lafontaine, the lawyer for Mr. Beatty, said, “Our position is that there was absolutely no fraud committed here by anybody, and we’re confident that the evidence will bear that out.”

Mr. Dunn’s lawyer did not respond to a request for comment but has said in earlier statements that his client had not committed any fraud.

The case is expected to be complex. Prosecutors have turned over about four million documents to the defendants, and the trial is likely to take several months.

Article source: http://feeds.nytimes.com/click.phdo?i=2c6450d289e3727d714373df690571c3

Bucks: Companies Offer Free Versions of Identity Theft Services

AllClearID

The recent spate of computer hacking and security breaches has heightened interest in credit and identity-theft monitoring services. Two companies, TrustedID and Debix, have started offering free versions of their surveillance systems.

We here at Bucks typically advocate creating your own free monitoring system.

You can, for instance, periodically obtain your free credit reports from the big three credit bureaus (one from a different bureau every four months, through AnnualCreditReport.com) and check them for suspicious activity. Or, as Ron Lieber discussed in a recent column, you can use the “security freeze” option.

But the idea of a service that is free and automatic piqued our interest. Debix and TrustedID claim to hunt down potential fraud by scanning online sites where fraudsters may be hawking your personal information. (A hat-tip to Edgar Dworsky at ConsumerWorld for alerting us to the free services).

Austin, Texas-based Debix is the provider of AllClearID, a service being offered by Sony to customers whose personal information was compromised in the breach of its PlayStation network. The Sony victims are getting service’s  “plus” version, which the company offers through corporate clients and includes insurance to cover financial losses.

But AllClear ID also offers a free version to the general public. It includes Internet surveillance, notification if suspicious activity is found and help with repairing your identity if information is stolen. To sign up, you enter your name, e-mail address and date of birth on its Web site.

Bo Holland, Debix’s chief executive, says he considers the most valuable feature of the free version to be the identity repair service. If someone successfully steals your identity — by obtaining personal information, like your Social Security number or date of birth — and opens bank accounts or credit cards in your name, the damage can take great effort to repair. Most people don’t know where to begin. “We can do it in a matter of weeks,” says Mr. Holland.

The Internet surveillance, he says, is done electronically; software scans online information in chat rooms where identities are bought and sold. The system also can monitor “peer to peer” file sharing networks, he said, which often act as “vacuums” sucking up vulnerable personal information from personal computers.

To sign up, you enter your name, e-mail address and date of birth at AllClearID’s Web site. The service doesn’t ask you to enter credit card numbers, because the company’s research shows consumers are often uncomfortable doing so, Mr. Holland said. But typically, he said, when identity information is found online, it is a collection of information like names, birth dates, e-mail addresses and Social Security numbers, which may also have credit card information attached.

AllClearID could boost its match rate by requesting more specific information from customers, like credit card numbers, but opts not to, he said in a follow-up e-mail. “We get pretty good results with our low data collection approach.”

TrustedID has also started offering a free version of their surveillance system.TrustedIDTrustedID has also started offering a free version of their surveillance system.

The free product from TrustedID, based in Redwood City, Calif., is called IDSafe. It includes monitoring of the Internet and “black market” Web sites for up to three credit cards and your Social Security number, along with e-mail notification of any suspicious activity.(The company’s premium version costs $14.99 a month, or $125 a year, and includes extras like protection for multiple family members, telephone notification of potential problems and protection for financial losses.)

Lyn Chitow Oakes, chief marketing officer for TrustedID, says it also uses electronic systems to monitor the Internet for possible misuse of personal information and credit card numbers (you provide the numbers you want tracked when you register). In addition, she said, company representatives may gain invitation to private chat rooms, where stolen data is hawked, so they can monitor conversations as passive participants.

“The information is monitored and matched against the information the customer provides us,” she said. If a flagged credit card or Social Security number is found, “We alert the consumer immediately,” initially by e-mail and, eventually, by phone if the consumer doesn’t respond.

IDSafe also provides a free credit score from TransUnion each year, but it isn’t the actual FICO score that a lender would obtain if you applied for a loan. “It gives you a pretty good idea of where your score would be,” Ms. Chitow Oakes said.

Do you subscribe to a credit or identity monitoring service? Has it alerted you to any problems?


This post has been revised to reflect the following correction:

Correction: June 7, 2011

An earlier version of this post referred incorrectly to the AllClearID service provided to Sony customers who were affected by recent security breaches. They are receiving the “plus” service, which does not include scanning of files at the three major credit bureaus.

Article source: http://feeds.nytimes.com/click.phdo?i=53fb9d86b2c750337d84265b892c735f