Ex-Nortel Execs Face Suit

The SEC files civil suits in an accounting scheme.
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Federal securities regulators sued four more former Nortel (NT) executives in civil court over their roles in a bonus scandal that was uncovered in 2003.

The ex-finance heads of four Nortel business units -- Doug Hamilton, Craig Johnson, Jim Kinney and Ken Taylor -- participated in fraudulent sales and profit reports, according to an amended complaint filed Wednesday by the

Securities and Exchange Commission

.

Attorneys for Hamilton, Johnson and Kinney were unavailable for comment. Taylor's lawyer declined to comment.

The book-cooking during 2000 and later in 2002 and 2003 convinced investors that the company was weathering an industry collapse, regulators charge. The SEC says the fraud helped trigger millions of dollars' worth of "return-to-profit" bonuses for the executives.

Previously, the SEC had charged four top ex-Nortel executives with fraud. Defendants in those cases were CEO Frank Dunn, CFO Doug Beatty and former controllers Mike Gollogly and MaryAnne Pahapill.

Nortel ousted Dunn and nine other executives tied to the accounting scandal, which became the subject of criminal and civil investigations and the source of two major shareholder lawsuits.

The bookkeeping blunders required investors to wade through an agonizing three restatements and caused the company to miss out on one of the largest rounds of industry consolidation. The era created

Alcatel Lucent

(ALU)

, the merger of

Cisco

(CSCO) - Get Report

and Scientific Atlanta, the acquisition of Redback by

Ericsson

(ERIC) - Get Report

and the joint venture between

Nokia

(NOK) - Get Report

and

Siemens

(SI) - Get Report

.

Meanwhile, Nortel has been slashing costs for two years under CEO Mike Zafirovski. But in the most recent quarter, the company swung to a loss of $37 million, or 7 cents a share, on declining sales.

And Nortel still hasn't put its four-year-old accounting mess fully in the past. Last month the company said it had to set aside $35 million to cover potential expenses tied to the resolution of an SEC investigation.