Ex-Lucent Brass Can Breathe Easier Today

Securities regulators netted no big fish in Lucent's (LU) fraud case.

After more than three years of investigation, the Securities and Exchange Commission named nine former and current sales employees in a scheme that inflated company's 2000 revenue by $1.15 billion and boosted the pretax bottom line by $470 million. The agency also fined Lucent $25 million for failing to cooperate with the inquiry.

The case, filed in Federal District Court in Newark Monday, focuses on a sales period in 2000 when Lucent overstated its revenue to keep up with growth expectations, even as the telecom equipment industry was starting to stall. Lucent has already agreed to a tentative settlement and erased $679 million in false sales from its books.

The SEC says "in their drive to realize revenue, meet internal sales targets and/or obtain sales bonuses" the nine defendants "improperly granted" side agreements, credits and other incentives to induce sales.

The SEC case does not appear to be aimed at former CEO Rich McGinn, or former CFOs Debbie Hopkins and Don Peterson, say people close to the situation.

"The best I can tell, this looks like the trail ends here," said one legal expert indirectly associated with the case. Part of the reason the case has taken so long is that the SEC probably did a lot of double checking to see if the responsibilities went any higher up than the lower level people that have been targeted, says the legal observer.

The SEC case charges that defendants Nina Aversano, Jay Carter, Leslie Dorn, William Plunkett, John Bratten, Deborah Harris, Charles Elliott, Vanessa Petrini, and Michelle Hayes-Bullock, padded the company's performance and beat sales targets by getting distributors and customers to agree to make larger than necessary purchases.

SEC enforcement director Paul Berger says that while no top executives were named in the case, players like Aversano were "pretty high up." Berger estimates that in 2000, Aversano was responsible for $26 billion in sales.