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PairGain Agrees to Plead Guilty Over Bad Books : Courts: The Tustin company also will pay $1 million plus investigation expenses to close improper internal accounting case.

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From Bloomberg News

PairGain Technologies Inc. said Thursday it agreed to plead guilty to a criminal charge of improper internal accounting and will pay a $1.4-million penalty resulting from 1995 investments with a Beverly Hills money management firm.

As a result of the faulty accounting, PairGain’s books did not accurately reflect the value of its investments with S. Jay Goldinger and his firm, Capital Insight Inc.

The Beverly Hills money management firm lost about $100 million in client funds, including $15.8 million belonging to PairGain, according to a report filed with the Securities and Exchange Commission.

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The anticipated plea, which calls for a $1-million fine and a $400,000 charge for investigative expenses, is not expected to have any effect on PairGain’s present or future business, the Tustin-based maker of telecommunications equipment said Thursday.

“We can now concentrate all our energies and resources on building the business and maximizing shareholder value,” the company said in a statement.

PairGain informed the SEC on May 17 that federal investigators on May 11 had told the company that it and two top officers, including Chairman Charles Strauch, had been identified as targets of a criminal investigation into losses by Capital Insight.

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The U.S. attorney’s office had sought to determine whether PairGain broke any laws in connection with its Capital Insight investments or whether it failed to promptly disclose its losses.

Representatives of the U.S. attorney’s office declined to comment.

PairGain stock fell 31 cents, to $9.19 a share.

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