Criminal Trial Scheduled for April 25 in U.S. Court : Securities Fraud Denied by Carl’s Jr. Employee
The accounting director for the Carl’s Jr. hamburger chain pleaded not guilty Monday to a criminal charge of securities fraud through insider trading.
Alvin A. DeShano, 53, of Orange was ordered to stand trial April 25 before U.S. District Judge A. Wallace Tashima in Los Angeles. Case attorneys have estimated the trial will last 4 to 5 days.
DeShano, a Karcher employee for 15 years, was indicted Feb. 17 on a charge of receiving and using confidential corporate information to avoid a stock market loss of $7,107.
He also is one 16 people accused of insider trading violations in a civil lawsuit filed in federal court last April by the U.S. Securities and Exchange Commission. That lawsuit accused Carl N. Karcher, chairman and chief executive of Anaheim-based Carl Karcher Enterprises, 14 Karcher family members and DeShano of avoiding stock market losses of at least $310,000 in 1984.
DeShano’s attorney, David W. Wiechert, has said his client is “above reproach” and had “legitimate reasons for diversifying his investments and assets” that were “wholly unrelated” to the inside information allegedly used.
The criminal charge against DeShano stems from the same accusations as the civil case, but they are a separate proceeding from the SEC’s lawsuit. Trial of the civil case is to begin April 11 in Los Angeles.
On Friday, U.S. District Judge Edward Rafeedie, who is hearing the SEC case, ruled that DeShano need not stand trial in that civil action until the criminal action against him is resolved.
Some idea of DeShano’s defense can be found in papers filed by his lawyer in the SEC civil lawsuit. DeShano “acted in good faith and without (knowledge) or any intention to deceive or defraud,” the papers state. His attorney, Wiechert, has said that DeShano’s good faith will be a key issue in the criminal trial.
If convicted of the criminal charge, DeShano could be sentenced to prison for up to 5 years and fined a maximum of $250,000.
Wiechert and the criminal case prosecutor, Assistant U.S. Atty. James Sanders, both have declined comment on why a criminal charge has been filed against DeShano but not against any of the other defendants in the civil case.
Six of the defendants in the SEC lawsuit--including company President Donald F. Karcher--agreed early this month to pay a total of $187,560 in civil fines and penalties to settle the civil case. A seventh, Carl Leo Karcher, son of Carl N. Karcher, was found guilty of insider trading 5 months ago in a civil case.
