After a 2 year probe of Delphi's accounting procedures, the SEC sued the bankrupt auto parts maker and 13 persons for fraud and other accounting violations on Oct. 30.
At the same time, Delphi Corp. and some of the individuals settled with the SEC, under which Delphi won't pay any fines or admit any wrongdoing. Last year Delphi restated 3 years of earnings to correct its accounting problems and only months later it filed for bankruptcy protection. Now Delphi successfully avoids getting fined by basically crying poverty.
Former CEO JT Battenberg III and 8 former Delphi executives were accused of fraud or aiding in accounting violations. 3 of the nine, including former Finance Chief Alan Dawes, agreed to pay fines.
The SEC justified its agreement with Delphi by saying that "Despite engaging in widespread fraudulent conduct, Delphi took significant remedial steps and cooperated extensively" said the SEC's Washington office.
Okay, so big business gets away with it again. Delphi cooks the books and, when they get caught, Delphi files bankruptcy and avoids having to pay any fines and doesn't even have to admit they did anything wrong. Sure, some of the players in the game got fined for helping Delphi use accounting tricks to inflate net income numbers by $202 million while hiding a $237 million claim, along with improper inventory accounting methods that bosted income numbers by $80 million. But most galling is the fact that high level executives and business people were in on the scam that inflated Delphi's numbers by hundreds of millions of dollars in nonexistent profit.
Not mentioned in any press release was how much money the "Delphi gang" was paid by Delphi to cook the books. Cooking the books is serious because investors rely on standard accounting practices and basic honesty in the decision to invest in a corporation's stock. Apparently some people at (or with) Delphi took a page from Enron's "playbook for accountants" and learned a trick or two.
So corporate shenanigans cost investors and consumers millions again while big government watches the back of big business, each one helping out the other at the expense of the rest of us. Something isn't just rotten in Denmark --- it's rotten in Detroit and Washington DC too. Maybe it's just all part of the GM Death Watch...
Delphi was spun off by GM several years ago and one can only hope that Delphi's accountants didn't learn their job from GM's accounting bosses, because if they did then this may be a good time to sell your GM stock!
If you've got a lemon GM car or truck, now may be the best time to do something about it (before someone counts the bean counters).
ABOUT THE AUTHOR
Known nationwide as a leading Lemon Law attorney, Ronald L. Burdge has represented literally thousands of consumers in "lemon" lawsuits and actively co-counsels and coaches other Consumer Law attorneys. From 2005 through 2018, attorney Ronald L. Burdge has been named as the only Lemon Law Ohio Super Lawyer by Law and Politics magazine and Thomson Reuters Corp., Professional Division. Burdge restricts his practice to Lemon Law and Consumer Law cases. The Ohio Super Lawyer results are published annually in the January issue of Cincinnati Magazine. Ronald L. Burdge was named Consumer Law Trial Lawyer of the Year 2004 by the National Association of Consumer Advocates, the nation's largest organization of consumer law private and government attorneys. "Your impact on the auto industry has been magnified many times over because of the trail you blazed for others," stated NACA's Executive Director, Will Ogburn. Burdge has represented thousands of consumers in Ohio, Kentucky and elsewhere since 1978 and is a frequent lecturer to national, state and local Bar Associations and Judicial organizations. Burdge is admitted to Ohio's state and federal courts, Kentucky's state courts, and Indiana's federal courts. Other court admissions are on a "pro hac" temporary, case by cases basis.