Photonic Products Group: Former CFO Stole $833,000
NORTHVALE, N.J., July 14, 2006 -- The former chief financial officer of Photonic Products Group Inc. (PPGI) stole more than $833,000 over a six-year period, the company stated in a recent report to the US Securities and Exchange Commission.
In Form 8-K, filed by PPGI President and CEO Daniel Lehrfeld on June 26, the company reported to federal authorities that its former CFO, William Miraglia, stole more than $833,000 from the company between 2000 and 2006. In a May filing with the commission, PPGI reported that its internal controls regarding the use of its debit card were inadequate and it was taking steps to limit the card's use. Miraglia, who up until that time had direct control of the debit card, no longer had access, PPGI said. Amidst the internal investigation, Miraglia was suspended with pay and barred from the company's facilities and records while the investigation proceeded. He was replaced as CFO by William Foote. After the investigation turned up more personal charges, Miraglia was fired on June 14, the company reported.
According to PPGI, Miraglia made $723,000 in unauthorized, personal charges on the company's debit card over the past six years, including $150,000 in 2005 and $33,000 in the first half of 2006. In addition, in a broader investigation conducted by the audit committee of PPGI's board of directors via an independent forensic accountant, the company discovered that Miraglia had also written unauthorized checks, including one totaling $94,500 to the IRS to pay his personal income taxes for 2004-06, and other unapproved payments totaling $16,000. PPGI said the investigation is continuing, and it has not found any evidence that any other employees were involved.
The company said Miraglia has signed an agreement to make restitution, but "in light of a number of factors, including the tax levy against him, the company does not believe that any significant recovery from Mr. Miraglia is likely in the foreseeable future." PPGI said it intended to file a claim with its insurance company to recover a portion of the money.
As part of its efforts to strengthen internal controls, PPGI said it has canceled its corporate debit card and now requires two authorized signatures on all checks of $5000 or more. The company also said that, based on the investigation to date, it didn't think the theft would affect its reported net income or earnings per share during the period the money was taken. PPGI did say it may also amend some forms filed with the SEC for 2005 to include information about the theft once the investigation is completed and reviewed by the independent auditors.
PPGI manufacturers photonics products through its three business units: Inrad, a maker of crystal-based optical components and devices and laser accessories and instruments; Laser Optics, a producer of custom optical components, assemblies and optical coatings; and MRC Precision Optics, a provider of precision diamond-turned optics, metal and aspheric optics, optomechanical and electro-optical assemblies. For more information, visit: http://ppgrpinc.com
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