Dorian Hargrove 4:30 p.m., March 11
Former Gateway Execs Nailed by SEC
The Securities and Exchange Commission (SEC) revealed today (Jan. 31) that two former executives of one-time San Diego computer giant Gateway have been enjoined from future violations of securities laws. Former chief executive Jeffrey Weitzen and former controller Robert Manza were charged with falsely representing the company's financial position in the year 2000 by, among other things, chalking up revenue on an incomplete sale of computers. As is typical in these SEC settlements, Weitzen and Manza neither admitted nor denied the SEC's fraud allegations. Both are to pay penalties.
On March 7, 2007, a federal jury had found Manza and former chief financial officer John Todd liable for fraud and making false representations to auditors. But two months later, federal Judge Roger T. Benitez overturned the jury verdict on fraud and other claims. (Benitez is notoriously easy in white collar wrongdoing cases.) The SEC appealed that ruling and one other, and the Ninth Circuit Court of Appeals reversed the rulings and remanded the matter to district court.
Gateway's co-founder, Ted Waitt, was a San Diego icon of sorts, having moved the company from Sioux City, Iowa. But on Sept. 2 of 2002, Fortune magazine had a cover story on "The Greedy Bunch," five executives who had massively bailed out of their stocks as outside shareholders got crushed in a downswoop. Two of the five were San Diegans: Waitt and John Moores, who had dumped $646 million of his Peregrine Systems shares, almost all he controlled. After Gateway's business and stock price collapsed, the company was bought in 2007 by Taiwan-based Acer. The operations, once based in La Jolla and later Poway, are now mainly in Irvine.