Another successful fraud investigation has been logged by ex-con Barry Minkow. In addition to the more than $1.8 billion in fraud Minkow is responsible for uncovering, he also proactively discovered faked credentials by several public company executives.
One that caused a big stir was that of Microsemi (NASDAQ:MSCC) CEO James Peterson. This one was interesting because Minkow said that Peterson didn’t have either the bachelors degree or masters degree that he claimed to have from Brigham Young University.
When this information was revealed, Peterson lied and said publicly that he indeed had the claimed degrees. Microsemi’s board went so far as to back him on this issue, basically saying they didn’t care if he had the degrees or not, and didn’t care that he lied. Even when hard proof was released, Peterson and the board stood by the lies.
Today the results of Microsemi’s “independent inquiry” have been released… and BIG SURPRISE…. Peterson doesn’t have any college degree!
And the board’s overall stance on this issue? They don’t care much. They’re going to hand Peterson some small penalties:
- Mr. Peterson will immediately pay $100,000 to the Company;
- Mr. Peterson will forego his potential for a bonus for the Company’s current fiscal year. During the last three years, Mr. Peterson’s annual bonuses averaged approximately $680,000; and
- The Board has extended by one year each of the five remaining vesting consummation dates of his two unvested restricted common stock awards (which aggregate to 323,000 shares of common stock, of which 116,000 shares would have vested by October 2009).
Sounds harsh, right? I don’t really think that it is, because at the end of the day, I predict this will be made up to Peterson in some other way. I’m not the only one who thinks this amounts to a little slap on the hand.
And more important, the board of directors isn’t serious about this credential issue. The press release blathers about how they’ll do background checks and update their ethics policy and tell employees that lying is bad… But in the same release they turn around and basically say that because Peterson was successful as CEO, they don’t really care that he lied:
Despite the results of the inquiry, we recognize that our Chief Executive Officer, Jim Peterson, has built a highly successful and profitable enterprise at Microsemi during the past nine years, with a strong business plan and vision for the future. Just as importantly, Mr. Peterson has consistently delivered on his word to the Board of Directors over his nine years with Microsemi.
Note to the Microsemi Board of Directors… lying about his credentials before he started the job (and more recently lying again when he was caught red-handed) is not “delivering on his word.”