NEWMAN TO PLEAD GUILTY TO FRAUD
Byline: Katherine Bowers
LOS ANGELES — Maurice “Corky” Newman, former chief executive officer of swimwear manufacturer Sirena Apparel Group Inc., is expected to plead guilty to securities fraud charges in a Los Angeles federal court today, a spokesman with the U.S. Attorney’s Office confirmed.
In a plea agreement obtained by WWD, Newman pleaded guilty to three counts of the 10-count indictment entered late last year against him. The counts include conspiracy to commit a crime, making false statements to the Securities and Exchange Commission, and accounting fraud.
There was no provision requiring Newman to testify against Richard Gerhart, Sirena’s former chief financial officer, who will stand trial on the same 10-count indictment on May 8.
The three counts against Newman carry a possible maximum sentence of 25 years and a $2.25 million penalty. Sentencing is expected within the next three months.
Gerhart and Newman were charged last October with falsely inflating Sirena’s third-quarter 1999 earnings by 30 percent and tampering with computer clocks in order to hold open the quarter long enough to meet analysts’ expectations.
Newman’s plea agreement reverses a not-guilty plea the former Sirena executive entered in October 2000. At the time, Newman’s attorney, Michael W. Fitzgerald, said he intended to “vigorously defend the charges.” Fitzgerald could not be reached for comment Tuesday.
The SEC has a case pending against Gerhart, seeking an injunction, civil penalties and an order barring him from serving as an officer or director of a public company. Newman settled his case with the SEC in September by paying a $30,000 penalty.
Sirena’s stock traded as high as $9, but dropped to $1.88 when news of accounting irregularities became public. The stock was delisted in June 1999.