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Four Former Charter Executives Indicted

July 24, 2003

ST. LOUIS (AP) _ Four former top executives of Charter Communications, the nation’s third-largest cable television company, were indicted Thursday on charges of scheming to defraud investors by inflating the company’s revenue and operating cash flow, federal authorities said.

Former chief operating officer David Barford, 44, of Chesterfield, Mo., and former chief financial officer Kent Kalkwarf, 45, of St. Louis, were charged with 14 counts of mail fraud, wire fraud and conspiracy to commit wire fraud for alleged schemes in both 2000 and 2001.

Former senior vice presidents David McCall, 48, of Laurens, S.C., and James Smith, 55, of California, were indicted on eight counts each of wire fraud and conspiracy for a 2001 scheme to inflate Charter’s subscriber numbers.

The men were expected to turn themselves in by noon Friday, U.S. Attorney Ray Gruender said.

A Charter spokeswoman did not immediately return a phone call seeking comment.

If convicted, each defendant could face up to five years in prison and fines of up to $250,000 on each count.

The indictments do not allege that subscribers were defrauded. Authorities said the schemes were aimed at defrauding Charter investors and investors in general.

Gruender said that in August 2000, Kalkwarf and Barford realized Charter might fall short of projected year-end revenue and operating cash flow numbers.

To inflate those numbers, Gruender said, the executives gave money to Charter’s suppliers of digital set-top boxes, which are pieces of equipment placed on subscribers’ TV sets through which they obtain digital cable.

Charter asked the suppliers to charge the company $20 more per set top box, Gruender said. Charter then allegedly received the $20 back and counted it as advertising revenue. As a result, Charter falsely included more than $17 million as revenue and cash flow for the year 2000.

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