Westlake Village exec Hovanec pleads innocent in Vitesse fraud case




The founder and former executive vice president of Vitesse, a Camarillo-based semiconductor manufacturer, pleaded not guilty to multiple securities fraud charges on Dec. 10 in a New York federal court, according to U.S. prosecutors.

Louis Tomasetta, Vitesse’s founder and CEO, and Eugene Hovanec, its former executive vice president, both denied allegations that they were involved in a scheme that falsely overstated the company’s revenues and profits, lied to the Securities Exchange Commission to take advantage of stock options and committed various other crimes related to the bookkeeping of the high-tech company.

“As this case demonstrates, we will use all of our resources to ferret out fraud in the board rooms and the executive suites,” said Manhattan U.S. Attorney Preet Bharara. “We will prosecute corporate CEOs, CFOs and other high-level executives who use their positions of power to deceive investors, auditors and securities regulators.”

In a written statement, Gary Lincenberg, Hovanec’s attorney, said his client “denies the charges and looks forward to addressing the legal issues in court.”

The allegations against the two men were detailed in an indictment unsealed late last week by federal prosecutors with the office of the U.S. Attorney for the Southern District of New York and the New York Office of the United States Postal Inspection Service.

Vitesse, once publicly traded on the NASDAQ, was taken off the board in 2006.

A week before the two company executives appeared in court, Vitesse’s ex-chief financial officer Yatin Mody, a 47- year-old Westlake Village resident, pleaded guilty to multiple securities fraud charges in federal court on Dec. 3 as part of an agreement to help federal prosecutors with the investigation, according to the U.S. attorney’s office.

Nicole Kaplan, a 39-year-old Agoura Hills resident and a former director of accounting, also appeared in federal court and pleaded guilty to charges of securities fraud, making false entries in the financial records of the company and conspiracy, federal prosecutors said. Kaplan is also cooperating with U.S. investigators.

Tomasetta, a 62-year-old Ojai resident, and Hovanec, a 60-year-old Westlake Village resident, were both released in lieu of a $1-million bond.

According to the indictment, between 2001 and 2006 Tomasetta and Hovanec orchestrated an illegal scheme to deceive the company’s internal auditors, investors and other company executives about the company’s true worth and financial condition.

The executives allegedly failed to report tens of millions of dollars’ worth of returned products in an attempt to inflate the company’s profits.

Tomasetta and Hovanec also allegedly backdated numerous stock options given to Vitesse employees from 2001 to 2004.

The backdating of the stock options allowed the two top executives to chose a payout price for the stocks “that was less than fair market value of the stock on the date that the Vitesse’s Compensation Committee granted the options,” according to the indictment.

The company appointed a special committee in 2006 to investigate reports of stock option fraud, according to the indictment. The investigation expanded to include the company’s bookkeeping and other financial statements that were reportedly falsified under the direction of Tomasetta and Hovanec, who were put on administrative leave four years ago and eventually fired.

Vitesse announced last week that it has agreed to pay $3 million to settle the SEC’s investigation of the company. As part of the settlement, Vitesse states that it didn’t take part in any wrongdoing. In 2007, Vitesse paid $8.75 million to settle shareholder lawsuits over backdating of employee stock options.


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