has fired and is suing a top executive at its Wizards of the Coast subsidiary for allegedly embezzling funds, the company confirmed Thursday.
Tom Federline, former senior vice president of operations at Renton, Wash.-based Wizards, which produces trading cards and role-playing games, was fired for "improper purchasing practices and falsifying expense reports," according to Wayne Charness, a spokesman at Hasbro. In addition, a consultant to the company is also being sued for the same offense.
Charness declined to say how much Hasbro, based in Pawtucket, R.I., is hoping to recoup, but a report on the Web site gamingreport.com describes it as a "multimillion-dollar lawsuit." Federline couldn't immediately be reached for comment.
At the same time, the company announced that Wizards CEO Vince Calouri is retiring. Chuck Heubner, a Hasbro executive, will replace him. The two events are unrelated, says Charness, and Hasbro did not mention the alleged embezzlement in the press release announcing Calouri's departure.
Shares in Hasbro, which is in the midst of a turnaround after losing $144 million in 2000, closed Thursday down 33 cents at $14.11.
Analysts who follow Hasbro say Wizards is only a small contributor to Hasbro's top line. But they say the alleged fraud could weigh on investor sentiment, especially at a time when investors have little patience for even the hint of corporate shenanigans.
But a look at company filings and earnings releases suggests Wizards has played a significant role in the company's finances.
Hasbro bought Wizards in 1999 for an initial payment of $325 million. Subsequent payments have brought the total up to about $500 million, according to regulatory filings. Hasbro does not break out Wizards' financials, but analysts estimate it accounted for between 5% and 10% of the company's $2.9 billion in annual revenue.
But in the past Wizards has been a much larger contributor, it appears from nuggets in company filings with the SEC. For example, the company disclosed that in 2000 Wizards' line of Pokemon trading cards alone accounted for 15% of the company's $3.8 billion in revenue. The wane in popularity of Pokemon cards was blamed, in part, for the decline in Hasbro's revenue in 2001.