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Technology's 8 most notorious CEO scandals

HP's CEO Mark Hurd isn't the first forced to resign

Following the announcement last week that Mark Hurd, CEO of HP, was forced to resign over a sex scandal, we look at tech's most notorious CEOs and just what they did to be given the chop.

Joseph Nacchio, Qwest CEO

Joe Nacchio, who first caught the public's eye as a blunt talking pitchman for AT&T in the late 1980s, resigned as Qwest's CEO in 2002 after stockholders raised questions about his $27m annual compensation package.

In March 2005, the Securities and Exchange Commission charged him, along with eight other former Qwest executives, with fraud. He was found guilty of 19 counts of insider trading in 2007, covering $52m in stock sales, and sentenced to six years in prison.

As of July 2010, Nacchio was still seeking relief from the court on his sentencing, which was recalculated earlier this year to be two months shorter than originally (to five years, 10 months).

Frank Dunn, Nortel CEO

In 2004 Nortel CEO Frank Dunn got the boot (along with CFO Douglas Beatty) for his part in a widespread accounting scandal. Dunn was charged by the SEC with directing an earnings management fraud to meet earnings targets, fabricate profits and pay performance-related bonuses. And the Royal Canadian Mounted Police charged him and other Nortel execs with making falsifying financial results and knowingly deceiving or defrauded the members, shareholders or creditors of Nortel. These alleged misdeeds forced Nortel to reissue its financial statements for 2000, 2001 and 2002 and for the first and second quarters of 2003.

Nortel's downward spiral pre-dated Dunn, but his team's efforts didn't do anything to slow the company's eventual path to bankruptcy in 2009.

Greg Reyes, Brocade CEO

Brocade CEO Gregory Reyes resigned in 2005 after the storage networking company revealed discovery of accounting irregularities in connection with stock-option grants. Reyes was sentenced to 21 months in prison and a $15m fine for fraud in 2008, though in August of 2009 his conviction was overturned on appeal due to misconduct by prosecutors. However, this past June Reyes was sentence to 18 months in jail and was ordered to pay $15m as a fine. Reyes has had a strong show of support from those who believe he was unfairly targeted by the government in a witch hunt of sorts, and another appeal is likely.

Sanjay Kumar, CA CEO

Sanjay Kumar was ousted as CEO of Computer Associates in April 2004 and pleaded guilty two years later to charges including falsely reporting hundreds of millions of dollars in revenue for licensing agreements before the deals were finalised.

Several other executives were also implicated in the financial fraud. Kumar reported to federal prison in August 2007 to begin serving a 12 year term. A US District Court judge ordered more than $1bn in restitution to the victims of the company's securities fraud. CA paid $225m of that total, leaving $798m in restitution to Kumar.

Stephen Gardner, Peregrine Systems CEO

Back in 2002, Gardner and Peregrine CFO Matt Gless resigned following an internal investigation $100m in accounting irregularities. The company had been a high flier in the asset management software business, making a series of acquisitions to fuel its growth.

Gardner was sentenced in 2008 to more than eight years in federal prison and to forfeit some $1.4m in proceeds from real estate and from brokerage accounts.

Peregrine wound up filing for bankruptcy protection in 2002, sold off its Remedy business to BMC, then emerged from bankruptcy protection in 2003 only to be acquired by HP in 2005.

  1. Hurd isn't the first tech chief forced to resign
  2. More CEO scandals

See also: The 50 biggest heroes in technology history

VIDEO: HP scandal actress 'surprised and saddened'


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