NEWS RELEASEFROM: Raymond W. Gruender
United States Attorney
Eastern District of Missouri
111 South 10th Street
St. Louis, Missouri 63102
For Further Information: Call Public Affairs Officer Jan Diltz (314) 539-7719
June 25, 2003
For Immediate Release
FORMER CHARTER COMMUNICATIONS, INC. SENIOR VICE-PRESIDENT PLEADS GUILTY TO CONSPIRACY TO COMMIT WIRE FRAUD
St. Louis, Missouri: Former Charter Communications, Inc Senior Vice-President, David McCall pled guilty this morning to conspiracy to commit wire fraud relating to his participation in a 2001 scheme to inflate Charter's subscriber count numbers, United States Attorney Ray Gruender announced today.
DAVID MCCALL, 48, of Laurens, South Carolina, pled guilty this morning to one felony count of conspiracy to commit wire fraud. He appeared before Chief United States District Judge Carol E. Jackson.
McCall now faces a maximum penalty of five years in prison and/or a fine of $250,000. Sentencing has been set for October 17, 2003.
As stated in court and set forth in the court documents, David McCall was Charter's Senior Vice President of Operations in charge of Charter's Eastern Division, which consisted of approximately half of Charter's subscribers. He reported directly to Charter's Chief Operating Officer. From June 2001 through March 2002, McCall participated in a scheme to defraud Charter's stockholders by reporting to the public artificially inflated numbers of paying subscribers. McCall was directed to use manipulative means to meet the forecasted numbers and was given approval to use fraudulent means to meet the forecasted numbers by his superiors in the company. As a result of this scheme, Charter released inflated subscriber numbers to the investing public in the second, third and fourth quarters of 2001.
According to an indictment returned by a federal grand jury in St. Louis yesterday, the fraudulent practice of managing disconnects was accomplished at Charter in several ways. For some of the subscribers who should have been disconnected, Charter actually disconnected their service but simply did not remove them from Charter's books or subscriber count. This part of the scheme resulted in Charter claiming subscribers who were not receiving any cable service at all. For other subscribers who should have been disconnected either because they had requested to be disconnected or because they did not pay their bill for Charter's services, Charter delayed their disconnection until after the end of the reporting period. This part of the scheme resulted in Charter claiming subscribers as part of its subscriber growth numbers who in the normal course of Charter's business would have been disconnected and removed from its subscriber count.
"Mr. McCall acknowledged in court today that he participated in a conspiracy to defraud Charter stockholders. We are very pleased to obtain his cooperation as we proceed with this prosecution," Gruender said.
Gruender commended the joint efforts of the United States Postal Inspection Service, the Federal Bureau of Investigation and Assistant United States Attorneys James Martin, Rosemary Meyers and Jeffrey Jensen, who are handling the case.
The Charter Communications investigation was conducted under the auspices of the Corporate Fraud Task Force, created by President Bush in July 2002 to investigate allegations of fraud and illegal activity in the corporate world. Through May 2003, more than 300 investigations have been opened into potential corporate fraud matters. More than 350 defendants have been charged with some type of corporate fraud crime, and over 250 corporate fraud convictions or guilty pleas have been secured.
With respect to the remaining three defendants, the charges set forth in the indictment are merely accusations, and they are presumed innocent until and unless proven guilty.
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