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 user 2004-03-12 at 11:04:00 am Views: 107
  • #6511

    New Katun Indictment plus Katun’s Clarke to pay $1.25 million more in fines

    Former Katun Corp. CEO Terence Michael Clarke, Who is already serving a two-year prison sentence for tax evasion, will pay the government an additional $1.25 million in fines and restitution.

    Meanwhile, the man who co-founded Katun 26 years ago with Clarke, David Jorgensen, was indicted Wednesday on three counts of mail fraud and three counts of wire fraud. Clarke pleaded guilty Wednesday in federal court to two counts of mail fraud for obtaining competitors’ proprietary pricing information. The $1.25 million he will pay in connection with those charges is in addition to the $6 million in criminal penalties and $4 million in back taxes, interest and penalties Clarke agreed to pay in connection to his 2003 tax conviction.

    All of the charges stemmed from his activities at Katun, a Bloomington copier parts company.

    Clarke, 59, who is serving time at a federal prison camp at Eglin Air Force Base near Pensacola, Fla., for the tax conviction, has now admitted to also engaging in schemes to pay Xerox Corp. employees for Xerox pricing information and authorizing Katun employees to offer gifts to parties who provided other confidential information, including passwords to protected Web sites. Clarke admitted authorizing Katun employees to use $900 tool kits to get competitive information including passwords to Web sites.

    Clarke faces additional prison time of up to five years for the fraud counts, but, according to the plea agreement he reached with the U.S. attorney’s office, prosecutors will not seek more than a year for the counts and will take no position on Clarke’s request that any additional time run concurrent with the sentence he is serving. No sentencing date has been set. Clarke co-founded the company in 1978 and was its leader until he was fired by the board of directors in June 2000.

    Jorgensen, who served on Katun’s board from the company’s founding until May 2003, faces up to five years in prison and $250,000 in fines for each of the six counts for which he has been charged. Jorgensen, 65, of Portola Valley, Calif., is accused of having used Katun funds to buy five luxury vehicles, including a $139,000 Ferrari, and of having manipulated the purchases to avoid paying tax and registration fees in California.

    Jorgensen is also charged with submitting a false $60,000 invoice to Katun for consulting services when the money was really used to purchase a BMW automobile.

    Last month, Larry Stroup, who succeeded Clarke as Katun’s CEO, pleaded guilty to fraud and agreed to pay $1.5 million in fines and restitution.

    The federal investigation of Katun has produced eight indictments of seven former executives and six plea agreements. The company itself agreed in January to plead guilty to 12 counts of fraud and to pay $11 million in fines and restitution for illegally obtaining pricing information from competitors’ Web sites, keeping money owed to customers and engaging in deceptive practices to secure lower airline fares. The penalty is believed to be the largest ever assessed against a business in Minnesota.

    An indictment also accuses former chief financial officer Kerry Baubie and former senior vice president Raymond Wirtz of conspiring to pay more than $140,000 in kickbacks to Minolta Business Systems executives to steer business to Katun. Katun was sold in July 2002, and is now owned by Banc of America Capital Investors and Svoboda, Collins LLC.