Possibly, Virginia, because he was a director of Peregrine Systems, Inc. for a time. I know its hard to keep track of all the corporate fraud cases in the last ten years. Peregrine Systems, a software company headquartered in San Diego, was a middling Enronesque implosion of this decade. Governor Bill Richardson joined its board of directors in 2001 at the invitation of Stephen Gardiner, CEO and brother in law of Richardson's wife. The firm was accused of overstating income on its financial reports by about $509 million and understating losses of $2.9 billion over a 33 month period that began in April 1999. Executives lied to investors and financial analysts to artificially inflate it's stock. The company imploded in 2002 after the scandal became public. Gardener pleaded guilty to securities fraud and conspiracy in March and was the ninth person to plea to criminal charges arising from the fraud. The scam cost investors $4 billion and put thousands out of work. Peregrine went into bankruptcy in 2003 and the reorganized company was bought by Hewlett Packard in 2005. Four officers who did not enter a plea agreement got a reprieve after their trial judge ruled a mistrial. The jurors in the case declared themselves deadlocked, but votes were in favor of acquittal. Gardiner was a lead prosecution witness against the former corporate officers who claimed they were deceived by senior executives. Prosecutors may seek a retrial in the case.Richardson claimed during his gubernatorial campaign that as an "outside director" he knew
nothing about the fraudulent activities of Gardiner. That alibi might fly in New Mexico but many Americans know that even directors who are not also corporate officers have a fiduciary responsibility to protect investors and the public from fraud. Richardson was paid $10,000 for his service from February 2001 until he resigned in June 2002. By then Peregrine was under investigation by the SEC. Trouble surfaced in April 2002 when the company switched accounting auditors, restated it's earnings, and began an internal investigation into it's accounting practices.Despite the Governor's claim that he was not informed, records reviewed by a San Diego business reporter, Don Bauder, show that Richardson attended at least 15 board meetings where directors were informed of the company's mounting problems. Richardson attended the meeting of July 18, 2001 at which Gardiner discussed a questionable barter trade between Peregrine and Critical Path, a Bay Area software company headed by a friend of John Moore, chairman of the Peregrine board. Moore, a real estate mogul and Padres baseball owner, made $650 millions more bailing out of Peregrine stock while it was collapsing. Moore is also a heavy Richardson contributor. In another meeting attended by Richardson on October 15, 2001, Gardiner told the board that a financial report he had given to financial analysts eleven days earlier was already outdated and things were getting worse. In May the SEC began investigating. For his part in the affair, Richardson wrote a letter to the board in June 2002 saying there should be an investigation. He told New Mexico voters that he helped uncover the illegalities by voting to replace the company's auditors. But the new auditing company was only on the job for two months before it, too, was fired. Only then did the auditors reveal the fraud. Governor Richardson had a clear duty to the public to heed the numerous warning signals coming from management and report the problems to the SEC before the cat was out of the bag. He failed that obligation perhaps because his relationship with big political contributors were more important to him than protecting the investing public.