Printer Friendly

GOTTSCHALKS RESOLVES CHARGES ARISING OUT OF GOVERNMENT INVESTIGATION

GOTTSCHALKS RESOLVES CHARGES ARISING OUT OF GOVERNMENT INVESTIGATION
 FRESNO, Calif., July 16 /PRNewswire/ -- Gottschalks, Inc. (NYSE: GOT), announced today that it has reached agreement with the United States Attorney's Office for the Eastern District of California to settle all criminal charges arising out of the government's investigation into a tax deduction taken by the company in 1986. As part of the agreement, the company will settle charges related to financial reporting. The latter charges were a recent outgrowth of the IRS investigation.
 Under the terms of the agreement, the company will plead guilty to one count of conspiracy to defraud the Internal Revenue Service, one count of conspiracy to file false statements with the Securities and Exchange Commission, and one count of filing false statements with the Securities and Exchange Commission with respect to the second quarter of 1990. The company has also agreed to pay fines totaling $1.5 million. The agreement is subject to the approval of the Department of Justice.
 The tax plea relates to the company's $3.7 million employee benefit plan deduction on the company's 1985 tax return. The company's former executive vice president and chief financial officer, Robert E. Lawson, and its former controller, Jack Farnesi, were indicted on June 4, 1992 on federal tax fraud and conspiracy charges arising out of that deduction. According to that indictment, the defendants backdated certain company documents and records, including checks, as part of a conspiracy to make the contribution appear timely. Lawson and Farnesi were terminated by the company in May, 1992 as the result of an internal investigation. The Internal Revenue Service has made no assessment with respect to any amounts that may be due on the challenged deduction, but the company is attempting to quantify such amounts.
 The financial reporting pleas arose out of the discovery of certain unsupported accounting adjustments. In its plea the company will acknowledge that such adjustments were made in certain quarters beginning in the second quarter of 1987. The company is not prepared to concede the materiality of such adjustments. The company does acknowledge that the unsupported accounting adjustments had an effect on the company's reported earnings for the second quarter of 1990. The company has not conclusively calculated the effect of these adjustments, but believes, based on information developed to date, that the misstatement amounted to no more than 5 cents per share for the quarter. The adjustments had no effect on the yearly statements. For the year of 1990 the company earned 80 cents per share.
 The company is confident, based upon an ongoing internal investigation, which was supervised and reviewed by the company's independent auditors, Ernst & Young, that its audited year-end financial statements present fairly, in all material respects, the company's financial position.
 Joe Levy, chairman and chief executive officer, stated "The board of directors agreed to accept the settlement in order to put these issues behind the company and to avoid prolonged, distracting and expensive litigation. The wronging of a few individuals should not be allowed to detract from the hard, honest work of the 4,300 employees of this company. Through the dedication of these employees the company will continue to prosper, grow and serve, the communities in which we operate."
 -0- 7/16/92
 /CONTACT: James Clifford, executive vice president, chief financial officer of Gottschalks, 209-434-4804/
 (GOT) CO: Gottschalks, Inc. ST: California IN: SU:


TS -- NY004 -- 9819 07/16/92 06:53 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jul 16, 1992
Words:570
Previous Article:TRANSCANADA PIPELINES ACCIDENTAL GAS RELEASE
Next Article:DH TECHNOLOGY REPORTS EARNINGS
Topics:


Related Articles
GOTTSCHALKS REPORTS INVESTIGATION CONDUCTED IN CONJUNCTION WITH IRS
GOTTSCHALKS TERMINATES CHIEF FINANCIAL OFFICER, CONTROLLER
GOTTSCHALKS EXECUTIVES CLEARED ON TAX CHARGES
GOTTSCHALKS ANNOUNCES JULY SALES RESULTS
GOTTSCHALKS ANNOUNCES CHAIRMAN TARGET OF INVESTIGATION
GOTTSCHALKS RESPONDS TO FREDERICK AND NELSON RULING
GOTTSCHALKS REPORTS RESULTS
GOTTSCHALKS ANNOUNCES A NEW BENEFIT FOR GOVERNMENT EMPLOYEES
Gottschalks Reports Audited Fiscal 2002 Fourth Quarter and Full Year Financial Results.
Gottschalks to Close Store in Seattle.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters