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Political Economy
Posted at 05:21 PM ET, 06/14/2011

SEC settles fraud case against former U.S. Technologies chief Earls

Eight and half years after it charged former U.S. Technologies chairman and chief executive C. Gregory Earls with securities fraud, the SEC has settled the case.

Earls agreed to be barred from serving as an officer or director of a public company for 20 years.

The SEC dropped its efforts to extract a fine and to force Earls to give up ill-gotten gains.

But that may come as little consolation to Earls.

In 2005, in a parallel criminal prosecution, he was sentenced to more than 10 years in prison and ordered to cough up almost $22 million in restitution.

Earls, 66, is now scheduled for release in 2014, according to the Bureau of Prisons.

A lawyer for Earls did not respond to messages by phone and e-mail.

Once a prominent figure in Washington social circles, he was accused of fleecing investors out of almost $14 million. His investors included such bold-face names as columnist George F. Will and former White House counsel C. Boyden Gray.

Investors entrusted him with more than $20 million to invest in securities issued by U.S. Technologies, but he misappropriated $13.8 million of it, the SEC said, claiming that money went to legal and accounting expenses and management fees.

In 2002, the woes of U.S. Technologies became the backdrop for a Washington political drama. In the aftermath of the Enron and WorldCom accounting scandals, former FBI and CIA director William H. Webster was tapped to head a newly created board to clean up the auditing business. Then it was reported that Webster had headed the audit committee at U.S. Technologies and that the company had been sued for alleged fraud.

The controversy over the appointment helped drive Harvey Pitt from office as chairman of the SEC, and Webster followed him out.

By  |  05:21 PM ET, 06/14/2011

 
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