The former principal of KPMG Consulting agreed to pay an $80,000 penalty to settle SEC charges related to his role in massive financial fraud at software company Peregrine Systems Inc. The SEC on Feb. 6 filed a settlement enforcement action against Larry Rodda that is subject to court approval. Rodda neither admitted nor denied SEC charges that he aided and abetted senior officers at Peregrine who allegedly orchestrated the fraud.

In 2004 the SEC accused Rodda of knowingly signing four sham license agreements that Peregrine used to falsely inflate product revenues from 2000 to 2002. The agreements made it appear that Peregrine had sold software through KPMG, allowing Peregrine executives to improperly record $22 million in revenue.

According to the SEC, Rodda was aware of the nature of the agreements. Rodda is also accused of helping Peregrine conceal the fraud from auditors at Arthur Andersen by signing a false audit confirmation.

In February 2003, Peregrine restated its financial results for 11 quarters, reducing reported revenue by more than $509 million. According to the SEC, at least $259 million of that amount was reversed because “the underlying transactions lacked substance.”

Rodda pleaded guilty in November 2004 to related criminal charges brought in Federal District Court in the Southern District of California. On Jan. 23 he was sentenced to six months in prison, six months of home detention and two years of parole. Twelve other individuals connected to the fraud, including the former CEO and CFO of Peregrine, have pleaded guilty in the ongoing criminal case.

“The case against Mr. Rodda reflects the commission's ongoing determination to police aiders and abettors and deter them from helping public companies cook their books,” Linda Chatman Thomsen, director of the SEC's Division of Enforcement, said in a statement. “Those who are caught aiding and abetting corporate accounting or other frauds will pay a substantial price for misleading investors, regardless of whether they personally profited from the fraud.”

The former principal of KPMG Consulting agreed to pay an $80,000 penalty to settle SEC charges related to his role in massive financial fraud at software company Peregrine Systems Inc. The SEC on Feb. 6 filed a settlement enforcement action against Larry Rodda that is subject to court approval. Rodda neither admitted nor denied SEC charges that he aided and abetted senior officers at Peregrine who allegedly orchestrated the fraud.

In 2004 the SEC accused Rodda of knowingly signing four sham license agreements that Peregrine used to falsely inflate product revenues from 2000 to 2002. The agreements made it appear that Peregrine had sold software through KPMG, allowing Peregrine executives to improperly record $22 million in revenue.

According to the SEC, Rodda was aware of the nature of the agreements. Rodda is also accused of helping Peregrine conceal the fraud from auditors at Arthur Andersen by signing a false audit confirmation.

In February 2003, Peregrine restated its financial results for 11 quarters, reducing reported revenue by more than $509 million. According to the SEC, at least $259 million of that amount was reversed because “the underlying transactions lacked substance.”

Rodda pleaded guilty in November 2004 to related criminal charges brought in Federal District Court in the Southern District of California. On Jan. 23 he was sentenced to six months in prison, six months of home detention and two years of parole. Twelve other individuals connected to the fraud, including the former CEO and CFO of Peregrine, have pleaded guilty in the ongoing criminal case.

“The case against Mr. Rodda reflects the commission's ongoing determination to police aiders and abettors and deter them from helping public companies cook their books,” Linda Chatman Thomsen, director of the SEC's Division of Enforcement, said in a statement. “Those who are caught aiding and abetting corporate accounting or other frauds will pay a substantial price for misleading investors, regardless of whether they personally profited from the fraud.”