Porn Valley- It may interest a lot of people to know that Larry D. Thompson whose name is being bandied about as a possible replacement for John Ashcroft was sued for stock fraud in 2002. Ironically, Thompson who was appointed by Bush, and confirmed by the Senate Judiciary Committee in May 2001, spearheaded the administration’s Corporate Fraud Task Force, created as part of an effort to prevent corporate scandals and restore investor confidence in the marketplace. Thompson stepped down from his DOJ spot just months after Providian had to cough up big bucks.
August, 2002: (Washington, DC) Judicial Watch, the public interest group that investigates and prosecutes government corruption and abuse, announced today that it is filing a shareholders suit in federal court in San Francisco, California, against Deputy Attorney General and Corporate Crime Task Force head Larry D. Thompson and other directors and officers of Providian Financial Corporation, as well as Providian itself, for alleged securities fraud involving misleading accounting practices and insider trading. Incredibly, Deputy AG Thompson was recently appointed by Attorney General John Ashcroft and the Bush-Cheney administration to head the Corporate Crime Task Force, which was recently created to combat the very kind of fraud and corruption alleged in this new lawsuit.
Documents filed by Providian with the U.S. Securities and Exchange Commission state that Thompson was the Chairman of the Providian Audit and Compliance Committee for several years prior to his resignation to become Deputy Attorney General in mid-2001. The Complaint alleges that Thompson and other director and officer defendants knew that Providian’s financial condition was deteriorating and adopted a fraudulent scheme to delay recognition of losses from the second quarter 2001 into the third quarter 2001, thereby artificially enhancing and inflating Providian’s stock prices and allowing the individual defendants to exercise their stock options and sell their stock to unsuspecting buyers before Providian’s true financial condition could be discovered. The Complaint further alleges that Thompson abused his official position to block any action by the Justice Department into the alleged fraudulent and illegal activities of Providian and the current and former insiders, including Thompson himself.
“Whether it is the Enron, Arthur Andersen, Global Crossing, Halliburton, Harken, or now the Providian scandal, there is a dangerous intersection between politicians of all stripes, Democrat and Republican, attempting to feed at the trough of business greed. The Providian scandal is especially egregious because it highlights this incestuous relationship in perhaps its clearest form – a director who allegedly participated in and profited personally from alleged securities fraud is appointed to a key government position where he is alleged, on information and belief, to have abused his official office to block appropriate government enforcement action,” stated Judicial Watch Chairman and General Counsel Larry Klayman.
April, 2003: Seattle law firm of Keller Rohrback said a class-action lawsuit on behalf of participants in Providian Financial Corp.’s 401(k) plan has been settled for $8.6 million.
Keller Rohrback and Nashville-based Branstetter, Kilgore, Stranch & Jennings sued Providian, contending that its 401(k) plan should not have purchased or held company stock during 2001. The suit also challenged the accuracy and completeness of information provided to plan participants about company stock.
Providian has consistently denied the allegations as factually untrue and legally without merit.
“We are pleased to resolve this action, and our management team will continue to focus its attention on building shareholder value,” said Alan Elias, senior vice president of corporate communications for providian.