L&H; Founders Face Fraud Charges

Shareholders of high-tech firm Lernout & Hauspie Speech Products received a double dose of bad news at their meeting Friday: The two founders were in jail and an additional $96 million of declared income turned out to be fictitious.

New Chief Executive Philippe Bodson also said he might put much more of the company up for sale than initially planned.

Jo Lernout and Pol Hauspie, who started the speech recognition company a dozen years ago, were charged with forgery and stock manipulation Friday.

Bodson then told shareholders at the court-ordered meeting that he had discovered $96 million more in nonexistent income since 1998, bringing the total to $373 million. He also said the employee exodus from the company’s headquarters in Ieper, Belgium, and Burlington, Mass., was much worse than anticipated. A quarter of the 6,000-strong work force has left.

Bodson, who took the helm this year after L&H;’s woes were revealed, said the group earned a total of $162 million during the previous 2 1/2 years, not the $535 million originally reported.

Its share price stood at nearly $70 in March 2000 and is barely a dollar now, blowing about $10 billion in the process and making L&H; one of the biggest new technology bubbles to burst.

Lernout and Hauspie, who no longer hold managerial positions at the company, were brought in for questioning Thursday by a judge investigating allegations of fraud.

Along with former board member Nico Willaert, they were charged with falsification of documents and stock manipulation and ordered held pending a court appearance Monday. They all have denied the charges since the investigation began in December.