John Milne, who was president and chief financial officer (CFO) of United Rentals from December 2002 to August 2005, has pleaded guilty in a New Haven, Connecticut, US court to one count of falsifying the company’s books and records.
Milne is due to be sentenced next February. Milne faces a maximum penalty of a five-year jail term and a US$ 250,000 fine. However, under a plea agreement with the Government, he is expected to face a reduced sentence of 27 months in prison. In a separate civil action brought by the US Securities and Exchange Commission (SEC) he has agreed to pay US$ 6.25 million relating to this offence.
Commenting on the case, Kimberly K. Metz, the FBI special agent in charge of the investigation said, “This guilty plea should serve as a warning to other corporate executives that the FBI is vigilant and is working with our federal partners to protect the integrity of our financial markets from manipulative business practices.”
The offence in question relates to payments made to Terex to settle a minor sale leaseback (MSLB) agreement. In January 2003, United Rentals paid Terex US$ 8.78 million as part of a remarketing agreement. The payment was to cover losses made by Terex on one of the MSLBs in the agreement. In March of that year United Rentals made another payment to Terex of US$ 4.03 million, which was owed to Terex under an MSLB via another manufacturer it had acquired. However, Milne falsely booked this payment as an equipment purchase.
Terex has already paid a fine to the SEC in relation to its part in the fraud.