Veritas CFO resigns over education lie
By Ron Day
Bloomberg News Service
Mountain View, Calif. Veritas Software Corp., whose name is Latin for "truth," said Kenneth Lonchar resigned as chief financial officer after admitting he lied about having a master's degree in business administration from Stanford University.
The company's shares fell 19 percent.
"I regret this misstatement of my educational background," Lonchar said in a statement sent by the company, a maker of computer data-storage software.
Chief Executive Officer Gary Bloom said in a conference call he was confident that second-quarter results certified by Lonchar were accurate. Investors are shaken after scandals at companies such as Enron Corp., where the ex-CFO is charged with running a multibillion-dollar fraud, and Tyco International Ltd., where executives were charged with looting more than $600 million.
"Here you have a CFO who signed the certifications and was inaccurate about his personal history; that casts some doubt on the numbers they reported," said William Rutherford, who manages $25 million for Rutherford Capital Management in Portland, Ore. "Everybody is skittish and ready to jump at a moment's notice."
Rutherford said he sold his Veritas shares in February. Veritas shares dropped $2.77 and finished at $11.73 on the Nasdaq Stock Market, after declining as low as $11.53. They have fallen 74 percent this year.
"This is disconcerting given that if a person can lie about one thing, they can lie about something else," said SoundView Technology Group analyst James Mendelson, who rates the shares "neutral" and said he doesn't own them. He said he has known Lonchar for more than 10 years and is "shocked" by the resignation.
Veritas named administrative chief Jay Jones as acting CFO and said the company will name a permanent CFO by year's end.
Lonchar joined the California-based firm when it bought software maker OpenVision Technologies Inc. in 1997 for $273 million. He began working as an accountant at Coopers & Lybrand, according to his biography on Veritas' Web site. Lonchar was paid $615,000 last year by Veritas and awarded 325,000 stock options, according to the company's latest proxy. He made $1.66 million by exercising 22,000 options last year.
It's unclear whether Lonchar attended Stanford at all, or whether he received a degree elsewhere. Veritas spokeswoman Marlena Fernandez said Lonchar wasn't available for comment. She declined to elaborate on Lonchar's educational background.
A Stanford university spokeswoman, Kate Chesley, said she couldn't comment on whether Lonchar attended the school. She did say he doesn't appear in any alumni directory.
Lonchar won CFO Magazine's Excellence Award for Managing External Stakeholders in 2001. He is a director at Florida-based Citrix Systems Inc. and is in good standing, spokesman Joe Horine said. Lonchar is a member of the American Institute of Certified Public Accountants, the largest accountants organization, spokesman Joel Allegretti said.