continued After the Peregrine scandal first broke and Moores returned as chairman, he quickly recruited Padres-related associates, including a law firm and an accounting firm, and, according to the unsecured creditors committee, dissipated the ailing company's assets to whitewash himself and board cronies in a report to the SEC.
In stepping back in, Moores said he would run the company with two colleagues, Rod Dammeyer and Noell. Dammeyer headed and Noell was a member of the critical-audit committee, which should have monitored the bookkeeping. The accounting firm that discovered the fraud, KPMG, said Peregrine wasn't cooperative in the effort to uncover the past deceit, the audit committee had no formal minutes, and management wouldn't even show KPMG the handwritten notes of audit committee meetings.
After KPMG made this revelation, Dammeyer quickly resigned, but management wanted to reward him for fees and expenses, noted the unsecured creditors committee. In March of this year, Moores, Noell, and two others left the board. The new board has indicated it will sue the old board. Moores, Noell, and the others claim they had no idea what was going on.
But as New York's Conference Board points out, it is the board's responsibility to set the ethical tone at a corporation -- and to mind the store. "Many of the good things that happen to companies and almost all of the bad things really emanate from the boardroom," says corporate-governance expert Henry Wendt of the American Enterprise Institute.
"When sales figures are inflated, the board holds ultimate responsibility," says The Board of Directors, published by the New York Times.
As the government's criminal and civil investigations continue, there are also more than 40 civil suits, several naming Moores as the deep pocket.
The government charged Gless with fraud for dumping $4 million of stock during the inflated-sales period. Moores sold about 100 times that during the fraud period. Aguirre intends to tell the jury that the amount of stock an individual sold was roughly proportionate to knowledge of what was going on.