Cramer CEO resigns under fraud, conspiracy charges

Jerry Crook, the CEO of UK-based inventory solutions provider, Cramer System, has resigned, reportedly in response to charges of conspiracy to defraud investors while he was an executive at Peregrine Systems.

Crook has been instrumental in growing Cramer into a leading, global OSS company and putting the company on a path to go public. The company has begun a search for a new chief executive, according to a company spokesman.

On Oct. 6, the U.S. Department of Justice handed down an indictment charging eight former executives of Peregrine Systems, Inc., one former outside auditor of Peregrine, and two outside business partners of Peregrine, with conspiracy to commit a multi-billion dollar securities fraud. A former Peregrine sales executive also entered a guilty plea to obstruction of justice charges. That executive joins several others who have agreed to cooperate in the government’s ongoing investigation.

One lawyer said the executives perpetrated the largest fraud in the history of the Southern District of California.

Peregrine Systems was among many technology companies that built billion-dollar war chests with their initial public stock offerings, only to loose all their value and declare bankruptcy. Peregrine eventually lost over $4 billion dollars in value. The indictment alleges that from its IPO in 1997 through 2002, Peregrine’s reported 17 consecutive quarters of revenue growth met or exceeded Wall Street analysts’ expectations. Peregrine’s stock price skyrocketed from $2.25 per share to $79.50 per share on March 27, 2000. As of June 30, 2001, Peregrine had a market capitalization of roughly $4.72 billion. But, on September 22, 2002, Peregrine filed for federal bankruptcy protection.

In a Justice Department document, Attorney General John Ashcroft said, “The indictment charges these defendants with a massive conspiracy that had at its core one corrupt goal: to hit the numbers quarter after quarter, no matter what. The betrayal of the public trust alleged in this indictment extended from the chief executive officer who headed the scheme to the independent auditor who knowingly certified the company’s false financial statements and allegedly made the continuing fraud possible.”

The indictment charges the following executives with conspiracy to commit securities fraud, wire fraud, bank fraud, and falsifying books and records: former Peregrine CEO Stephen Gardner; former Peregrine executive vice presidents for worldwide sales Douglas Powanda and Andrew Cahill, Jr.; former Peregrine vice president for Europe and Emerging Markets Jeremy (Jerry) Crook; former Peregrine president and COO Gary Lenz; former Peregrine senior vice president of alliances Joseph Reichner; former KPMG Consulting LLC managing director Larry Rodda; former president of Barnhill Management Corporation Michael Whitt; former Peregrine vice president of finance and chief accountant Berdj Rassam; former Peregrine revenue manager Patrick Towle; and former Arthur Andersen LLP audit partner Daniel Stulac.