Former Executive at Liberate Is Charged With Securities Fraud

From Reuters

The former chief operating officer of software firm Liberate Technologies Inc. was charged with securities fraud stemming from allegations he struck illegal deals that inflated company revenue, prosecutors said Wednesday.

Prosecutors allege Donald Fitzpatrick manipulated revenue at the firm, which provides software to run cable television boxes, during four successive quarters ending in 2003 that cost investors more than $40 million.

A San Francisco grand jury handed down a four-count criminal indictment against Fitzpatrick on Tuesday, charging him with conspiracy to commit securities fraud, securities fraud, making a false statement to auditors and falsifying the books and records of Liberate.

Fitzpatrick, 48, was fired by the San Mateo, Calif.-based company whose stock now trades over the counter. Authorities think Fitzpatrick, a British citizen, is in Australia.


In a related action, the Securities and Exchange Commission filed a civil complaint alleging securities fraud against Fitzpatrick and Thomas Stitt, a former Liberate vice president of sales. Stitt settled the charges without admitting or denying allegations. He agreed to pay $28,000 in disgorgement and a $50,000 penalty, the SEC said.