Firepond Reports Fraudulent Sales Contracts

By Dennis Callaghan  |  Posted 2002-06-01 Print this article Print

The developer of Web-based sales configuration and customer service software said that a sales vice president forged signatures on three sales contracts valued at $5 million.

Firepond Inc. on Friday reported that three new sales contracts it had previously announced this year were falsified. Signatures on the contracts were forged and the status of the contracts had been misrepresented by acting vice president of Sales Jim Reid, who was fired Wednesday, Firepond officials said. One falsified contract was with Canadian manufacturing company Bombardier. Company officials did not specify whom the other two were with.
License transactions of $3.5 million in the first quarter of fiscal year 2002 and $1.5 million in the second quarter have been declared invalid and Firepond, which develops Web-based sales configuration and customer service software, will restate earnings accordingly.
Officials at the Waltham, Mass.-based company said they are continuing to investigate other transactions, which could result in more adjustments. The fraudulent transactions discovered so far were brought to the attention of company management only late last week. Reid and two unnamed "accomplices" outside of the company are the only ones suspected of falsifying transactions so far, Firepond officials said. "This individual has not only breached the trust of the entire Firepond community -- our employees, our customers, our shareholders -- he has also violated the basic tenets of business ethics and human decency," said Firepond CEO Klaus Besier in a statement. "At Firepond, our entire company is outraged by his actions, but we are determined not to let the fraudulent behavior of a single individual derail the strong and solid reputation we have built over the past 20 years in business." Company officials said that at least two of the three transactions in question represent real sales opportunities that were never closed and that Firepond is continuing to pursue business with those companies. Firepond last week reported a net loss of $2.5 million on $7.2 million in revenue for its fiscal second quarter ended April 30. The company expects to restate those earnings and its first quarter earnings within two weeks. Firepond is expected to soon release its SalesPerformer 2002 product, which will add an interface to SAP AG back-office systems and to Ariba Inc.s e-business platforms. In addition, the new version will have a new application server independent architecture designed to speed implementation and simplify maintenance. That product is targeted to manufacturers. The company is also releasing a separate version of SalesPerformer for the insurance industry. In June, Firepond is expected to deliver a new release of its eServicePerformer product line and, at that time, will begin delivering the product exclusively through a global reseller channel.

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