SIRENA SHAREHOLDERS AWARDED SETTLEMENT
Byline: Kristin Young
LOS ANGELES — Former shareholders of Sirena Apparel Group Inc. were awarded slightly more than $200,000 in restitution for the fraudulent actions of the swimwear maker’s former two top executives, federal judge Dickran Tevrizian Jr. ruled here on Monday.
Maurice “Corky” Newman, Sirena’s former chief executive officer, and Richard Gerhart, former chief financial offer, each are currently serving a sentence for falsely inflating Sirena’s third-quarter 1999 earnings by 30 percent in order to meet analysts’ expectations and making false statements to the Securities and Exchange Commission and in press releases. The inflated earnings were forecast in a conference call prompting several analysts to issue “strong buy” recommendations to shareholders.
The award of $210,043.30 was based on an agreement between the two executives and the government that the illegal actions resulted in losses to shareholders totalling $290,000. Judge Tevrizian had reduced that loss figure to $225,000 based on a mathematical formula. The further reduction to the final award amount was based on an out-of-court settlement with shareholder American Industries, a holding company headed by Howard Hedinger.
The court required that restitution be paid directly by the convicted executives but did not specify the exact breakdown in payments between the two. Newman must pay $20,000 by Nov. 5 and $500 a month thereafter. Gerhart wasn’t required to pay any money upfront and his monthly payments will be $200, starting 30 days after his release from prison next March.
In July, Newman was sentenced to three years probation, six months of them in a halfway house, and $30,300 in separate fines after pleading guilty to three of the 10 counts against him. In September, Gerhart was sentenced to four months imprisonment, four months in a half-way house and $6,000 in separate fines after admitting to nine of the 10 charges.
Newman is currently serving as director of special projects at Great Escape, a manufacturer of children’s and junior apparel based in Los Angeles. Newman requested house arrest instead of a halfway house, complaining that the strict schedule at the house was interfering with his job.
The judge responded: “I’ve given him every break. I really can’t do any more than I’ve done.” But the court did recommend to the halfway house that Newman be permitted 10 hours off the premises a day, rather than the current nine.