A federal grand jury has charged the former chairman of now-defunct Vari-L, Joseph Harold Kiser, with taking part in a conspiracy to inflate the company’s financial reports.
Kiser, 67, of Aurora, is the fourth person charged in connection with accounting overstatements at the company that authorities have alleged amounted to more than $30 million.
Kiser’s Denver attorney, Fred Baumann, refused to comment on the indictment handed down in U.S. District Court in Denver on Thursday.
Vari-L made equipment for wireless phones and other communications devices. The company was recognized in 1999 by Deloitte & Touche as one of Colorado’s most promising firms.
Fraud allegations, financial restatements and the telecom shakeout sent the company on a downward spiral. Competitor Sirenza Microdevices bought Vari-L in 2003 for $15 million.
The indictment alleges that Kiser and former Vari-L chief executive David Glen Sherman, 60, met regularly to compare the company’s likely quarterly results with forecasted goals. If it appeared Vari-L would fail to meet the company’s revenue targets, they would decide how much fraudulent revenue to declare and then Sherman would tell accountants to book revenue on products that hadn’t been shipped, a violation of federal accounting regulations, according to the indictment.
Kiser and Sherman rigged the books every quarter beginning in early 1996 through at least the third quarter of 1998, in order to enrich themselves, according to the indictment.
“Kiser would recommend to Vari-L’s compensation committee that he and co- conspirator Sherman should receive stock options and cash bonuses, based upon Vari-L consistently meeting or exceeding projected financial results,” the indictment said.
Among other things, the six count indictment charges Kiser with perjury. He faces potential penalties of up to 35 years in prison and $5 million in fines, though any sentence is unlikely to be that severe.
Sherman has agreed to plead guilty in the case and is scheduled to submit his plea on July 28.
Former chief financial officer Jon Clark and former controller Sarah Hume have already pleaded guilty to falsifying an annual report. Neither has been sentenced.
The plea bargains of all three require them to provide authorities with evidence against any others involved in fraud at the company.
Staff writer Tom McGhee can be reached at 303-820-1671 or tmcghee@denverpost.com.
