NEWMAN SENTENCING SET
Byline: Katherine Bowers
LOS ANGELES — Sentencing for Maurice “Corky” Newman, the former chief executive officer of Sirena Apparel Group Inc., who pleaded guilty in a Los Angeles federal court Thursday to conspiracy, making false statements to the Securities and Exchange Commission and accounting fraud, has been confirmed for June 25.
Richard Gerhart, Sirena’s former chief financial officer, is expected to enter a guilty plea for the nine counts against him in a hearing set for April 16, according to Assistant U.S. Attorney Gregory Weingart. Gerhart’s attorney did not return a call at press time.
Newman faces a maximum possible sentence of 25 years in a federal prison and a fine of $2.25 million. Michael Fitzgerald, Newman’s attorney, said that he will request that no prison time be served.
“This is not a traditional securities fraud case in that the goods in fact were shipped,” Fitzgerald said. “Mr. Newman is willing to acknowledge that what he did was wrong, but he is unwilling to accept particularly that he had a specific intent to defraud the shareholders.”
Weingart said, as of yet, the government is seeking an undetermined amount of restitution for shareholders.
After Newman reported falsely inflated earnings in a press release and conference call, several analysts issued “strong buy” recommendations on Sirena’s stock. One called the holding a “potential home-run stock,” according to Weingart.
Fitzgerald said that he plans to show that Sirena’s eventual bankruptcy resulted from a variety of factors rather than from the manipulation of the third-quarter 1999 results.
“We dispute that there were serious consequences with regard to the investors,” Fitzgerald said.
In findings revealed to the court Thursday, Newman’s conspiracy to hold the quarter open was well-known by office staff who could see that the clocks on their workstations still listed March dates as late as April 12.
“[Sirena employees] had an office pool going on how long the quarter would be held open,” said Weingart.