SAN DIEGO - A onetime controller for the former San Diego-based software company Peregrine Systems Inc. was sentenced Tuesday to a two-year federal prison term for his role in a scheme to defraud shareholders between 1999 and 2002.
Berdj Joseph Rassam, 42, pleaded guilty on Feb. 27, 2007, to one count of securities fraud.
In his plea, Rassam admitted scheming with others to deceptively write off Peregrine's uncollectible account receivables by including them with unrelated acquisition and other expenses.
Rassam admitted knowing that those write-offs would mislead securities analysts and the investing public as to the true status of Peregrine's financial condition.
Last week, U.S. District Judge Thomas Whelan sentenced Andrew Vincent Cahill Jr., Peregrine's former executive vice president of worldwide sales, to 27 months in custody.
Cahill, 50, pleaded guilty to securities fraud on Feb. 27, 2007, admitting that he backdated a contract purporting to bind KPMG to purchase $11.5 million of Peregrine software for resale to Morgan Stanley.
Backdating the contract allowed Peregrine to inflate its revenue numbers and mislead Wall Street regarding its results for the fiscal quarter, according to the U.S. Attorney's Office.
Also this month, Whelan sentenced two former Peregrine treasury officials to probation for their misrepresentations to financial institutions.
Former Assistant Treasurer Ilse Cappel, 46, pleaded guilty in 2002 to conspiracy to commit bank fraud. She admitted fabricating a $19 million invoice from Peregrine to KPMG Consulting LLC, which she then sold to a financial institution.
The financial institution did not suffer a loss, however, because Peregrine repurchased the fabricated invoice before the fraud was detected, prosecutors said.
Also last week, Whelan sentenced John Burnham Benjamin, Peregrine's former treasurer, to five years probation based on his conviction for conspiracy to commit wire fraud.
Benjamin, 43, pleaded guilty in 2004 to knowingly making materially false statements in order to convince a financial institution to continue extending credit to Peregrine on a $150 million line of credit.
The financial institution did not suffer a loss because Benjamin caused Peregrine to repay the loan before the fraud was detected, according to court papers.
Former Peregrine Systems Chief Executive Officer Stephen Parker Gardner pleaded guilty in March 2007 to conspiracy, securities fraud and obstruction of justice and was sentenced to 97 months behind bars.
According to court files, Gardner exercised stock options and sold thousands of shares of Peregrine stock, reaping about $8.2 million in net proceeds. The defendant also took annual bonuses from Peregrine that at one point exceeded $1 million.
When Peregrine publicly disclosed its accounting improprieties in May 2002, the company's stock price collapsed. Peregrine later sought federal bankruptcy protection and eventually was sold to Hewlett-Packard.
Shareholders have claimed losses of more than $3 billion resulting from the fraudulent activities of Gardner and others, according to prosecutors.
