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Stephen Gardner, former chief executive of Peregrine Systems, was sentenced today (Dec. 11) to eight years and one month for his role in the fraud. Gardner's lawyer, Reid Figel, said that Peregrine was engaged in criminal activity before Gardner arrived in 1997. "When he came to Peregrine, this type of activity was the practice," said Figel. "It was the way they did business." Gardner made $8.2 million dumping Peregrine stock. The company's former chairman, John Moores, who was with Peregrine almost from the beginning, dumped nearly $500 million of stock during the fraud period, and $650 million worth, almost all he controlled, during his time with the company. Toward the end, Moores suggested that his personal lawyer, Charles La Bella, be brought in to spearhead a study of what happened. That study was done by the law firm of Latham & Watkins. As stated by creditors in bankruptcy court, the study was a whitewash of Moores. The person who headed the Securities and Exchange Commission's Peregrine probe blessed the Latham & Watkins study, then went to work for Latham & Watkins. The study was used by the U.S. attorney's office as a template in the criminal cases against other Peregrine executives, including Gardner. A San Diego judge would not let this information be introduced in court. Throughout the fraud period, Gardner informed Moores and other board members of the activities going on in the company. But criminal authorities ignored this information, and San Diego judges kept diluting civil suits against Moores and other board members. They have now agreed to pay a total of $55 million to those who were defrauded, but there is a battle among plaintiffs delaying resolution of the matter. The sentencing memorandum in Gardner's case was sealed by the judge, because of "highly sensitive personal information" on the defendant's physical and mental health. Gardner is the brother-in-law of the wife of Bill Richardson, who has been appointed commerce secretary in the upcoming Obama administration. Richardson was a Peregrine board member, and attended meetings at which dubious accounting and other activities were discussed.

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Comments

Burwell Dec. 11, 2008 @ 5:17 p.m.

I read that Moores submitted a filing to the SEC identifying in advance the dates he would sell his shares of Peregrine, and the specific number of shares he would sell on those specific dates. I also read that the SEC filing ocurred two years before the first documented episode of financial fraud ocurred at the company. This may have been a major stumbling block that prevented his prosecution, and complicated the civil suits. I do not know if this is true or not. I also do not understand why Gardner and the other indicted executives did not try to save themselves by blaming the fraud on Moores. They went down like Gordon Liddy did for some reason. The media has largely ingnored the Peregrine case. There have been no in-depth articles on Peregrine of the type that were written about Lerach's corruption.

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Don Bauder Dec. 11, 2008 @ 7:28 p.m.

Response to post #1: Executives generally outline a plan of disposing of their shares. That should make no difference in the prosecution of civil suits, or for that matter, criminal ones. Actually, when this was set up, the idea was to give insiders a chance to justify their selling of shares -- to make it look innocent. In the trial of some of the executives, lawyers attempted to bring up the Moores massive jettisoning of shares, and the government's use of the Latham & Watkins study, and the judge wouldn't permit the points to be entered into evidence. No in-depth articles? I have written plenty of them for the Reader and even wrote some for the Union-Tribune. Best, Don Bauder

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Fred Williams Dec. 12, 2008 @ 7:26 a.m.

John Moores doesn't dare appear in public anymore.

If he did, he'd be mobbed by Peregrine shareholders, Padres fans, and tax paying San Diegans all lining up to take a turn kicking his greedy ass.

What Moores has been doing all these years, flouting the law and thwarting justice, is leading to a collapse of confidence in our most important societal institutions.

So long as he's not in jail, there can be no hope of San Diego ever recovering its dignity, and there's no reason to teach our kids right from wrong when they can point to John Moores living it up with stolen money and rightfully conclude that crime pays.

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Don Bauder Dec. 12, 2008 @ 8:02 a.m.

Response to post #3: The collapse of confidence particularly applies to the judiciary, as well as alleged law enforcement. Best, Don Bauder

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JohnnyVegas Dec. 12, 2008 @ 8:43 a.m.

I would love to mob Moores, and take some of my taxpayer frustration out on his nose (with my fist).

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Visduh Dec. 12, 2008 @ 9:54 a.m.

John Moores has bought plenty of friends. His largess was directed to SDSU, and he also served as president of the University of California Board of Regents. Even his wife finally got sick of him, and their divorce is now blamed for the woes of "his" Padres. He has a house of cards that now shelters him, and it should fall. But don't hold your breath waiting for that to happen.

L'il Abner used to say that "any fool can plainly see" Moores benefitted from this fraud, and that as the head of Peregrine, set it in motion. But Gardner, who is also guilty (please don't see him as victim), is going to take an eight year fall in Lompoc, Pleasanton, or other such federal slammer. Justice is done--NOT.

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Don Bauder Dec. 12, 2008 @ 4:24 p.m.

Response to post #5: It could have been worse: you might have been BOTH a taxpayer and a Peregrine shareholder. Best, Don Bauder

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Don Bauder Dec. 12, 2008 @ 4:30 p.m.

Response to post #6: I didn't mean to suggest that Gardner deserves sympathy. The records show that he briefed the board regularly on what was going on. Moores was told specifically by the corporate lawyer NOT to sell stock during a certain period because he, Moores, had inside information about a pending acquisition that, the insiders felt, would initially hurt Peregrine stock. Moores dumped anyway. The SEC and judges in civil suits, along with the U.S. attorney's office, are looking the other way. This should surprise no one. It's how the system operates. Best, Don Bauder

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concernedcitizen77 Dec. 13, 2008 @ 4:44 p.m.

It seems to me that Moores, who spread generous campaign contributions like manure around San Diego, Sacramento,and Washington to Democrats and Republicans alike, was "the elephant in the room" that no one, even former US Attorney Carol Lam, wanted to cross.

If this had been New York or another City Moores would have "gone down" on major felonies.

It seems Moores alleged wrongdoings were more serious than convicted felons George Steinbrenner(illegal campaign contributions) and Martha Stewart(insider trading).

Would a "change of venue out of San Diego" have helped bring Moores actions to light?

I have always wondered about the timing of the Larry Lucchino/Moores "fallout". It seems to have happened soon after the Peregrine "pump and dump" fiasco was coming to light.

Lucchino, a Lawyer, may have wanted to dissociate himself from Moores for obvious reasons.

Will the Moores divorce proceedings be "public record" or will some local sympathetic Judge seal the case and the answers to some of San Diego's pressing questions with it?

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Don Bauder Dec. 13, 2008 @ 8:33 p.m.

Response to post #9: I don't think any change of venue would have helped. I suspect that word came down from Washington to let Moores off the hook. The SEC, Justice Department and both state and federal judges did as they were told, but even if the word had not come down from Washington, he would have gotten off the hook in San Diego. As to Lucchino, I don't think his departure was his idea. It's my understanding that Moores pulled the trigger. As far as I know, the divorce proceedings have not been public. Best, Don Bauder

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