04-10-02
RTO Online
The long awaited court case involving Rent Way accounting irregularities
begins today in Erie, PA.
According to court documents. The New York firm of Cramer Rosenthal McGlynn
bought 433,000 shares of Rent Way stock for their clients in 2000.
Two weeks later, Rent Way announced it would have to 're-state' earnings as a
result of accounting irregularities.
Cramer Rosenthal claims Rent Way and their auditor, Pricewaterhouse Coopers,
"conspired" (their words) to manipulate stock price to fund the
companies rapid expansion. The suit also claims the CEO Bill Morgenstern knew of
the manipulations a full year prior to disclosure. A theory Rent Way's CEO
adamantly denies.
Rent Way effectively admits to 'sloppy accounting' and loose controls due to
rapid expansion, but vigorously denies any intentional company wide effort aimed
at deceiving stockholders, or anyone else. Blaming the event on a few key
executives who hid the true nature of the problem from the board.
After Rent Way made the irregularities public, controller, Matthew Marini,
was fired and chief operating officer, Jeffrey Conway, left the company
voluntarily.
end
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