COURT REJECTS RICHARD GERHART GUILTY PLEA
Byline: Katherine Bowers
LOS ANGELES — In an unusual move, a federal judge here has rejected former Sirena chief financial officer Richard Gerhart’s guilty plea to nine counts of securities fraud, after last minute legal quibbling broke out over the indictment’s wording.
“I can’t accept this plea. We’ve got to go to trial with this,” federal judge Dickran Tevrizian Jr. concluded, frustrated, late Monday. “It has got to be an unequivocal [guilty] plea. It can’t be ‘I agree to this, but not to that.’ “
Gerhart was prepared to plead guilty to all nine counts of the indictment against him — including conspiracy, making false statements to the Securities and Exchange Commission and circumventing accounting controls — but took exception to the government’s definitions of “fraud” and “deceit”, according to his attorney, Michael Meza.
“We are taking a position that there was no fraud, but clearly deceit and false and untrue statements,” Meza said.
“The government threw in the kitchen sink here. And we’re not willing to buy the whole kitchen,” Meza added, after the judge warned that attempts to qualify the indictment’s wording could force him to reject the guilty pleas.
Assistant U.S. Attorney Gregory Weingart said later that he was not aware of any legal differences between the words “fraud” and “deceit.”
“An intent to defraud is an intent to cheat or deceive,” he said.
Meza said when Gerhart goes to trial May 8 he will plead guilty to certain portions of the indictment, including engaging in a conspiracy to hold the quarter open with Newman and making false statements to analysts.
The jury trial is expected to last several weeks, but a source close to the case speculated that the two attorneys might try again to reach a plea agreement. A jury trial is generally riskier, legal experts said, because the defendant does not get a break in sentence for “acceptance of responsibility.”
If found guilty of all nine counts, Gerhart faces a maximum sentence of 85 years in prison and a fine of $8.25 million.
Maurice “Corky” Newman, Sirena’s former chief financial officer, pleaded guilty to conspiracy, making false statements to the SEC and accounting fraud on April 11. Sentencing for Newman is set for June 25. Newman faces a possible maximum sentence of 25 years in prison and a $2.25 million fine.