Frank Dunn’s Legal Woes

EXNT
What is it that you are looking for as punishment regarding Madoff? He will be 200 plus when his sentence is complete. At least in the US justice is swift. Dunn still walks free.
JJ

How about a new use for Guantanamo Bay?

was watching documentaries on piracy in the 18th century. the spanish sent them to a painful inquisition, the brits hanged them, the french did as well, the portuguese put them in a hole.

considering the crime of these people, Z, Dunn, BoD, one can only imagine what would have happened to them.

seeing Madoff, Sanford scam billions and just get prison terms is ridiculous. only in America.

Frank Dunn will get what is coming to him. With all the money people lost by his crooked actions I am actually surprised he is still walking.

The benefit of dragging out the court proceedings is these guys have to pay the legal bills. They are already in purgatory; next spot is hell!

Isn't this just like Dunn.
Isn't this just like Canuckistan.
A common criminal who cooked the books ala Bernie Madoff COUNTERSUES and will likely win.
Ala arar and the rest.
What a country.
Happy Fourth of July America.
My Home Sweet Home.

Hard to understand why the Canadian criminal prosecution of Dunn has not gone forward by now. Are Canadian authorities waiting for an outcome of the Chubb civil litigation? If so, that's a weak position.

The recent U.S. shareholder lawsuits against Nortel are routine -- these lawsuits are filed all the time -- and do not indicate on the surface that there is any criminal conduct by Z. Incompetence is not a crime in the U.S., and given that the creditors and courts have approved all the bonus programs in place, it will be extremely difficult if not impossible for a prosecutor to prove any criminal conduct by Z.. based on what we know today.

Remember this is Canada.
The government has it in for Nortel after losing money in stock.
They don't care about the employees or the future of the technology.
They care about Frank and John.
Mark it.

In all seriousness I do not understand how Dunn is not in prison already.

Mike Zafirovski may be next in the firing line to be hit with violating the law.

http://www.prlog.org/10238697-nortel-networks-c...

I don't guess Frank Dunn and Zafirovski could share a jail cell though. One would be in a canadian lockup and the othe in the U.S.

Well no...Z has his office in Canada....so let the RCMP do their work. He doesn't have a diplomatic passport.

Bernie Ebbers is Canadian and is in a US jail cell ... we'd be glad to have Dunn, too.

However, I'd personally like to send Zudas and Hackney to a Tijuana, Mexico prison. The Mexican inmates would really take kindly to Hackney and his pretty smile and blue eyes. There, he could play the role of a defenseless young girl assaulted by a bully in a parking lot.

http://en.wikipedia.org/wiki/Bernie_Ebbers

http://www.telepresenceoptions.com/images/Joel_...

It should read
The Court of Appeal
read
Former Nortel execs in court battle over legal bills TheStar.com - Business - Former Nortel execs in court battle over legal bills
June 22, 2009
Tracey Tyler
LEGAL AFFAIRS REPORTER

The former chief executive of Nortel Networks Corp. is living a "nightmare" as he attempts to defend himself against charges of security fraud and faces the prospect of personally paying staggering legal bills, the Ontario Court of Appeal was told today.

As the once-powerful company he ran announced it would sell itself off piece by piece, former CEO Frank Dunn — along with former Nortel chief financial officer Doug Beatty — were waging a fierce courtroom battle against the firm's insurer.

Chubb Insurance Co. rescinded its directors and officers liability coverage to Dunn and Beatty in 2003 on the basis of what it considered misrepresentations about class-action lawsuits launched by shareholders in 2001, after the company's growth projections were scaled back drastically.

The insurer is prepared to pay only 50 per cent of the legal expenses incurred by Dunn and Beatty while defending themselves before the Ontario Securities Commission and the Securities and Exchange Commission in the United States against allegations they engaged in two accounting frauds.

They were fired in 2004.

On Monday, as the Toronto Stock Exchange suspended trading in Nortel stock, the two men were appealing an Ontario Superior Court judge's decision from earlier this year, which dismissed their request for a declaration that they were entitled to be reimbursed for between 90 and 100 per cent of their legal expenses.

Those expenses could easily run to millions of dollars.

With his director's liability coverage having seemingly disappeared into a "huge black hole," Dunn is "against the wall," his lawyer, Tom Heintzman, told a three-judge panel headed by Associate Chief Justice Dennis O'Connor.

"Mr. Dunn is living a nightmare that every executive officer dreads," he said. "For five years, he has been facing this litigation and defending himself from allegations he says are false. And he is presumed innocent."

But "nobody can defend themselves against the SEC without the insurance that was in place for his protection," Heintzman argued. "He should not have to bear that burden."

Dunn and Beatty, who were also charged by the RCMP a year ago with falsification of documents and fraud affecting the public market, watched from the gallery of the second-floor Osgoode Hall courtroom Monday. Dunn is free on $250,000 bail; Beatty on $100,000.

Bonnie Tough, Beatty's lawyer, told the court it is "clear as a bell" that a directors' insurance policy that covered both her client and Dunn between 1999 and 2001 covers most if not all of their legal expenses, despite Chubb's decision to deny them coverage under the policy in place in 2003.

Tough pointed to a provision that allows coverage for "wrongful acts" not covered during the policy period to be allocated to a previous policy.

That provision might apply in the case of Dunn and Beatty if the accusations levelled against them by securities regulators alleged one continuous fraud, Gary Luftspring, a lawyer representing Chubb, told the court.

In fact, however, the securities regulators allege two "entirely different" types of fraudulent accounting, the first a "revenue recognition" scheme involving billing transactions in 2000, Luftspring said.

The second, which allegedly took place in 2002 and 2003, was an "earnings management scheme" that resulted in the company making unrealistic earnings projections to Wall St. and large bonuses for Nortel executives, he said.

If the court doesn't see the allegations as two separate frauds, Luftspring conceded Chubb's decision to deny the two men insurance coverage is on shaky ground.

"If you want to find they are (both) connected to accounting fraud or quasi-criminal acts, I am dead," he said.

The court reserved its decision.

What was that movie
with the line "Dead man walking"?
green mile?
http://www.thestar.com/Business/article/446516

"Bank of Canada governor David Dodge once called our "wild west" notoriety among global investors."

gobal investors? what about North American investors and employees with OSC blessing, EDC support, and a court system approving bonuses.

Open season on the any investor remains in a country that rewards than punishes fraud with a regulatory system that parallels the fox looking after the chicken coup.

Corruption and tyranny at the highest levels whether they testify in the hot seat with bells on or go unnoticed altogether, Canada is the place to scam and get away with it, exonerated, or even rewarded.

You can say that again.
Just ask the new immigrant, the bilingualist or the multiculturalist who come here with Charter in Hand. And don't forget Arar, and the rest who Iggy wants to "bring home".
They can tell ya.

Initially, when the alleged fraud for bonuses hit the fan years ago, Chubb contested that Nortel was not paying the premiums to be covered. I am surprised they paid a red cent to date let alone 50% as litigation still lingers before the courts.

Chubb's coverage was based on the fact their financial statements were indeed correct. Like most investors, it was totally unanticipated that a huge blue chip with such a large market cap would also accompany this level of risk, let alone mass orchestration. After all, Nortel had won awards for their accounting and disclosures in the past to this. Who would remotely anticipate so many would fall prey to this high degree of governance irregularities with intent. Certainly not even their insurance company, who by law should not be allowed to cover acts of crime with intent. What stops anyone from burning down their house they seek to totally renovate? Would insurance companies cover this before they learned whether it was arson or error with a mountain of paper to prove it was overwhelmingly arson?

Chubb should not pay a red cent to show criminal activity is not covered under the insurance act in no uncertain terms. How did the courts rule to allow them to cover even 50% of this is beyond me.

Nortel itself also paid $1B to defend a handful of people when this first hit the fan as their past board who denied obvious red flags for bonuses they approved and received timely resigned in plea bargain to expedite than delay fraud lawsuits, many people still remain at Nortel to thios very day that Owens termed "hard to find", evidently with following revisions it seems. Nortel remained reluctant to chase past officers even after repeated requests which resulted in a derivative class action, and it is ironic the board increased lawsuit insurance recently when trading losing options bet for cash yet again, the precise stunt that created this whole mess to begin, albeit under legal blessings this time while circumventing creditors in a court that approved bonuses before a bonus driven plan they even cut severances to assist facilitate one.

If the court approved insurance coverage so far, maybe Dunn will even win his wrongful dismissal law suit as board member Manley's firm defends him thinks. Imagine a board member's firm suing his own company as he trades options for cash. Sounds as defiant s torching the place after an inquisition they were forced to attend, or always pair layoffs topressure like like RCMP charges when even more were terminated months later.

Paying 50% is a hoot, let alone a red cent, or all of it like yet another of endless punch lines.

The proceeds of crime are rewarded, they voted to keep fraud bonuses at a kangaroo AGM, then were allowed to print high interest company paper to pay the fallout with loopholes closed immediately thereafter, have a green team not at the crime scene loot the corpse into the close with court blessings, as they increase lawsuit insurance to a whopping $300M recently.

The enormous liberties extended from no OSC fine, to their ultimatum fraud settlement refusing to negotiate pay practices, they tanked with even more and following revisions they downplayed to claim profit on the tanked settlement shares, as the SEC stepped in years later to monitor the ever so long extended repair of low tech accounting.

The new lower profile albeit higher paid fall guy defrauding from day one as a green CEO promoted his green criminally charged pal over a veteran, he led by example trying to manipulate a public company's stock let alone one he ran legally, by unrepentantly buying shares by example he used as a defense than blemish under inquiry, is like staging the fasts and the furious or Indy 500 on Ohio streets with police officers handing out cheques instead of tickets =)

Nortel has got away with murder.

Chubb should moon them than be forced by the courts to pay a red cent to insure criminal activity.

What kind of precedent does this set. Fraud pays?

It sure has in Nortel's case, in a country that rewards than punishes it with a joke regulating authority as they make a circus out of our courts with their political contacts, legal power, and hot seat testimonials with bells on.

Insurance coverage is as much of a joke as the liberties extended in allowing them to printing so many billions in paper with their high level contacts in government, the courts, finance, etc., that are slowing being pummeled to the ground as the wheels of justice turn slowly, and in some of Canada's cases, not at all but rewarded and protected.

Court of Apple. LOL. Appeal?

yes4 Apple
Tom Hanks?

rings a bell?

>ra&
>mtc
>raslappl

Justice in the legal system comes too slow. These acts took place in 2003-04, were apparently uncovered in 2007 (probably earlier), and we're now in 2009 and the criminals are still free.

At least Madoff's justice was more swift.

You know, for all he did, and naive as I know it is, he has my sympathies.

It's kind of like Madoff getting 150 years for his little f/u.

"Charging a man with murder in this place was like handing out speeding tickets in the Indy 500."

"Outsource whoever wrote and signed that legal code. And put any added cost into the jet we're selling." - Mike Z

It would be interesting to have an independent rank of companies by their leadership over the past 25 years.

I would wager my 10,000+ worthless NT shares that our executives would have us somewhere in the bottom quartile.

As my ID alludes, the failure started at the top, including the BOD.

Throw 'em out and run them through the city square whilst hurling spoilt produce. My choice, Oranges in a sock aka "The Grifters".

why not soap....from what I understand it doesn't leave any marks :P

I realised Steve Jobs was taking over that part of the world left untouched by Google but hadn't thought it had gone so far that Apple was actually now running an Ontario court: "Yesterday, a Court of Apple judge said Nortel’s insurance policy is “ambiguous”, and send he dispute back to a trial judge."

It had to happen eventually I suppose.

On June 19, 2008, Dunn (then aged 54) was arrested by the Royal Canadian Mounted Police, along with two other former Nortel executives, charged with fraud affecting the public market, falsification of books and documents and producing a false prospectus.[2]
http://en.wikipedia.org/wiki/Frank_Dunn

There are 2 links under
one to criminal charges laid by RCMP (not working)
try to get there from here
http://www.rcmp-grc.gc.ca/imet-eipmf/index-eng.htm
it's blocked!
Public cannot read the charges, I guess.
and one to
http://www.sec.gov/news/press/2007/2007-39.htm
Washington, D.C., March 12, 2007 - The Securities and Exchange Commission today filed civil fraud charges in the U.S. District Court for the Southern District of New York against four former senior executives of Nortel Networks Corporation for repeatedly engaging in accounting fraud to bridge gaps between Nortel's true performance, its internal targets and Wall Street expectations. Nortel is a Canadian manufacturer of telecommunications equipment.

Named in the Commission's complaint are Frank A. Dunn, Douglas C. Beatty, Michael J. Gollogly and MaryAnne E. Pahapill. The complaint alleges that these individuals engaged in this misconduct while serving as top corporate executives of Nortel between September 2000 and January 2004. During that time, Dunn served as Chief Financial Officer and Chief Executive Officer; Beatty as Controller and Chief Financial Officer; Gollogly as Controller; and Pahapill as Assistant Controller and Vice President of Corporate Reporting.

"The fraudulent conduct at issue here was egregious and long-running. Each of the defendants betrayed Nortel's investors and their misconduct gave rise to billions of dollars in shareholder losses," said Linda Thomsen, Director of the Commission's Division of Enforcement. "The action we take today sends a strong message that officers of U.S.-filing foreign corporations will be held to the same standards of accountability that are required of all participants in the U.S. financial markets."

Christopher Conte, an Associate Director of the Commission's Division of Enforcement, stated, "The defendants charged today all disregarded accounting principles and disclosure requirements designed to provide investors with a clear and accurate picture of a company's performance. Investors were misled for extended periods of time about the health and stability of Nortel's operations. Further, these defendants all received significant compensation, in some cases in the millions of dollars, while they were manipulating Nortel's financial results. In some cases, these individuals received such compensation only because they manipulated Nortel's financial results."

According to the Commission's complaint, from late 2000 through January 2001, Dunn, Beatty and Pahapill altered Nortel's revenue recognition policies to accelerate revenue as needed to meet forecasts and, from at least July 2002 through June 2003, Dunn, Beatty and Gollogly improperly established, maintained and released reserves to meet earnings targets, fabricate profits and pay performance-related bonuses.

The complaint specifically alleges the following.

* In late 2000, Beatty and Pahapill implemented changes to Nortel's revenue recognition policies that violated US GAAP, specifically to pull forward revenue to meet publicly announced revenue targets. However, because their efforts pulled in more revenue than needed to meet those targets, Dunn, Beatty and Pahapill selectively reversed certain revenue entries during the 2000 year-end closing process. These actions improperly boosted Nortel's fourth quarter and fiscal 2000 revenue by over $1 billion, while at the same time allowing the Company to meet, but not exceed, market expectations.

* In November 2002, Dunn, Beatty and Gollogly learned that Nortel was carrying over $300 million in excess reserves. Dunn, Beatty and Gollogly did not release these excess reserves into income as required under US GAAP. Instead, they concealed their existence and maintained them for later use. Further, in early January 2003, Beatty, Dunn and Gollogly directed the establishment of yet another $151 million in unnecessary reserves during the 2002 year-end closing process to avoid posting a profit and paying bonuses earlier than Dunn had predicted publicly. These reserve manipulations erased Nortel's pro forma profit for the fourth quarter of 2002 and caused it to report a loss instead.

* In the first and second quarters of 2003, Dunn, Beatty and Gollogly directed the release of at least $490 million of excess reserves specifically to boost earnings, fabricate profits and pay bonuses. These efforts turned Nortel's first quarter 2003 loss into a reported profit under US GAAP, which allowed Dunn to claim that he had brought Nortel to profitability a quarter ahead of schedule. In the second quarter of 2003, their efforts largely erased Nortel's quarterly loss and generated a pro forma profit. In both quarters, Nortel posted sufficient earnings to pay tens of millions of dollars in so-called "return to profitability" bonuses, largely to a select group of senior managers.

* During the second half of 2003, Dunn and Beatty repeatedly misled investors as to why Nortel was conducting a purportedly "comprehensive review" of its assets and liabilities, which resulted in Nortel's restatement of approximately $948 million in liabilities in November 2003. Dunn and Beatty falsely represented to the public that the restatement was caused solely by internal control mistakes. In reality, Nortel's first restatement was necessitated by the intentional improper handling of reserves which occurred throughout Nortel for several years, and the first restatement effort was sharply limited to avoid uncovering Dunn, Beatty and Gollogly's earnings management activities.

The complaint charges Dunn, Beatty, Gollogly and Pahapill with violating and/or aiding and abetting violations of the antifraud, reporting, books and records, internal controls and lying to auditors provisions of the federal securities laws. Dunn and Beatty are separately charged with violations of the officer certification provisions instituted by the Sarbanes-Oxley Act. The Commission seeks a permanent injunction, civil monetary penalties, officer and director bars, and disgorgement with prejudgment interest against all four defendants.

The Commission acknowledges the assistance of the Ontario Securities Commission, which conducted its own separate, parallel investigation.

The Commission's investigation is continuing.