DOJ Indicts New Cognos Exec

Cognos' brand-new senior vice president of operations has been indicted on charges of conspiracy to commit multibillion-dollar securities fraud, the BI company has learned.

Cognos Inc.s brand-new senior vice president of operations has been indicted on charges of conspiracy to commit multibillion-dollar securities fraud, the business intelligence company found out this week.

Upon finding that Andrew Cahill was indicted in connection with financial restatements while he was employed at Peregrine Systems Inc., Ottawa-based Cognos issued a statement saying it has reassigned the executive to "other duties within the organization."

Attorney General John Ashcroft of the U.S. Department of Justice on Wednesday announced that a federal grand jury in San Diego had handed up charges against eight former executives of Peregrine, along with a former outside auditor of Peregrine and two outside business partners.

Peregrine has been in hot water over its accounting practices dating back to the Enron era of 2002, when independent auditor KPMG uncovered questions about possible accounting improprieties. KPMG had stepped in after Peregrines initial auditor, Arthur Andersen, had to back out of auditing Peregrine due to its difficulties stemming from the Enron fiasco.

The San Diego company filed for bankruptcy in September 2002 and subsequently had to restate three years of earnings. CEO Steve Gardner and chief financial officer Matt Gless resigned their posts, and the company signed a consent decree settling a Securities and Exchange Commission suit alleging "massive financial fraud" by former officers of the company.

At this point, based on an investigation by the FBI, the DOJ has charged Gardner, Cahill and nine others with conspiracy to commit securities fraud, securities fraud, wire fraud, bank fraud, and falsifying books and records.

The indictment alleges that from March 1999 through May 2002, the defendants improperly booked software license revenue on backdated, impaired or sham transactions; tricked financial institutions into extending credit based on false financials and false accounts receivable; concealed a "mountain of uncollectible accounts receivable;" and employed accounting trickery such as manipulating reserves.

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Cognos in May hired Cahill as senior vice president in charge of sales, services, support and alliances for North America and Latin America. Cahill had been vice president of worldwide sales at Peregrine before coming to Cognos. Before that, he held a number of roles at IBM, including executive sales positions in the United States and Europe.

Cognos has charged Tony Sirianni, Cognos senior vice president of worldwide operations, with taking over Cahills duties.

Civil charges are still being pursued by the SEC, and the governments investigation also continues.

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