3 p.m., April 29
Gene Ray Makes Hall of Fame. Hmmm
Gene Ray has become the ninth local executive to make the Entrepreneur Hall of Fame, which is sponsored by Connect, a technology trade group. Ray "has brought billions of dollars and created tens of thousands of jobs for the San Diego community," gushed Connect, according to the Union-Tribune. But Ray and his colleagues at the former Titan Corp. and SureBeam, a now-defunct offshoot, raised lots of eyebrows among government investigators and on Wall Street. Ray founded aerospace contractor Titan Corp. in 1981, and one of the criticisms of the company was it seemed to worry more about running up its stock than creating profits. In the late 1990s, Titan stock soared as the company touted its telecom ventures in emerging nations. However, word leaked that Titan was bribing officials in Benin. In 2005, Titan paid $28.5 million to settle criminal and civil charges that it bribed the president of Benin. At the time, it was the largest penalty imposed on a company in the history of the Foreign Corrupt Practices Act, said the New York Times. Titan pleaded guilty to three felonies in federal court in San Diego and agreed to pay $13 million. Titan then said it would pay $15.5 million to the Securities and Exchange Commission.
Titan had a subsidiary, SureBeam, that claimed it could irradiate foods. Titan spun off the company and its stock traded separately, although Titan still had a position in it. Like Titan, SureBeam stock enjoyed a big runup based on expectations. SureBeam fired two auditors, one of whom had questioned the company's revenue recognition practices. The stock zoomed when SureBeam said it could kill anthrax, but that didn't work out. Creditors howled and SureBeam went into Chapter 7 liquidation in early 2003.
Titan and SureBeam got hit with civil lawsuits. Allegedly misleading accounting and foreign bribery issues were among the charges. Titan was to be sold to Lockheed, which lowered the price it would pay as troubles mounted. Then the deal blew up in 2004. Titan was sold to L-3 Communications the following year.