SANTE FE, N.M. – Stockholders of a computer software company under investigation for its accounting practices have sued current and former board members, including Democratic gubernatorial nominee Bill Richardson, for failing to oversee its financial affairs.
Richardson resigned in June from Peregrine Systems Inc.'s board and has distanced himself from the financial problems of the company, which had been run by his brother-in-law.
At least five lawsuits have been filed against Richardson and other board members of the San Diego company, which has said it may have overstated as much as $100 million in revenue and may have to restate three years of earnings.
The former New Mexico congressman and energy secretary under President Clinton says he was unaware of the accounting irregularities, which have triggered investigations by the Securities and Exchange Commission and a congressional committee.
Peregrine's stock plummeted after the company's accounting troubles became public in the spring. It closed Monday at 49 cents, less than 2 percent of its 52-week high of $27.50.
One lawsuit said the directors cost stockholders millions of dollars by allowing wrongful manipulation of earnings and inadequately supervising employees.
The directors can be liable for any false or misleading statements the company made because they signed the registration statement filed with the SEC, said Theodore Hess-Mahan, a Boston lawyer in a class-action lawsuit involving Peregrine.
Peregrine fired Arthur Andersen as its auditor in April and fired its replacement auditor, KPMG, in May. KPMG alleged possible fraud at the company in a letter it sent to the SEC.
Richardson's brother-in-law, Steve Gardner, resigned as Peregrine's chairman and chief executive office May 6 when the irregularities were disclosed.
Richardson became a board member in February 2001 and resigned after winning the Democratic nomination for governor in New Mexico's June 4 primary. He held no management positions, owned no stock and was paid $10,000 for attending eight board meetings, his campaign said.
Dave Contarino, Richardson's campaign manager, said Richardson "feels he fulfilled his role'' as a Peregrine director and "had no role in the day-to-day operations or decision-making of that corporation.''
Contarino and Peregrine spokeswoman MeeLin Nakata said they could not comment on the pending litigation.
Richardson's ties to Peregrine have not played prominently in the race for governor. He faces Republican nominee John Sanchez and Green Party candidate David Bacon in November.