13.04.2008

Fraud charges filed against Milne

The USA’s Securities and Exchange Commission has filed securities fraud charges against John Milne, the former vice chairman, president and chief financial officer of United Rentals, the world’s largest rental company with a fleet of over 60,000 aerial lifts.

Milne is the third CFO to be charged in connection with the financial irregularities at United Rentals between 2000 and 2002. Michael Nolan, another former CFO of United Rentals was charged in December,See United CFO pleads guiltywhile Joseph Apuzzo, a former CFO of Terex was charged with aiding and abetting the two.

See SEC files against ApuzzoSee SEC investigates Terex

The SEC’s complaint, alleges that, from 2000 through 2002, Milne engaged in a series of fraudulent transactions undertaken in order to meet United Rentals’ earnings forecasts and analyst expectations. The filing claims that Milne and Nolan organised a series of interlocking three-party transactions, structured as “minor sale-leasebacks,” to allow United to recognise revenue prematurely and inflate profits.

As a result of the transactions the company overstated its financial results enabling United to pull through a tough period without breaching its loan covenants. In addition Milne is accused of having sold around $38 million with of shares in United that he owned, knowing that the company’s published financial results were overstated.

The SEC is seeking to ban him permanently from holding any directorships as well as civil penalties. The U.S. Attorney’s Office has also announced that Milne was indicted on conspiracy, securities fraud, making false statements to the SEC and related charges in a parallel criminal action.

Milne was fired by United in August 2005 for failing to cooperate with the company’s internal investigation.See Milne Fired In early 2006, the company announced several changes to its internal accounting controls and restated earnings from the fourth quarter of 2000 through 2002.

The SEC says that its investigation is continuing.