Plea Is Set on Insider Trading Charges

The former controller of CalAmp Corp. has agreed to plead guilty to criminal insider trading charges, three years after he slipped a confession onto his boss’ desk and walked away from the Oxnard-based maker of satellite dishes.

Barry Richard Kusatzky faces as many as 27 months in prison and as much as $2 million in fines, according to a plea agreement filed Tuesday in U.S. District Court in Los Angeles.

“Mr. Kusatzky has accepted responsibility for what he did,” said his attorney, Stanley I. Greenberg of Los Angeles.

Kusatzky has acknowledged that he hid losses and liabilities at CalAmp -- formerly known as California Amplifier -- in an effort to meet analysts’ forecasts in 1999 and 2000, Greenberg said.

The U.S. attorney’s office charged that Kusatzky used his knowledge of the hidden losses to profit from the sale of 15,000 stock options at the end of 1999, a transaction that the government alleges netted the 53-year-old $350,000. It is illegal for corporate officers to trade securities based on nonpublic information.

As controller, Kusatzky, who joined CalAmp in 1997, was responsible for preparing financial projections. In late 1999, he realized he had underestimated expenses associated with CalAmp’s purchase of a Delaware satellite manufacturing firm, according to the court filing.

Fearing he would be fired, Kusatzky falsified internal company reports to hide $3 million in costs, according to the filing.

He continued to hide expenses and liabilities for more than a year, even faking records to show that a CalAmp subsidiary in Hong Kong had more money in the bank than it actually had. The fraud caused the company to overstate profit by about $7.8 million over two years.

The fraud went undetected until March 23, 2001 -- the morning CalAmp’s auditors were scheduled to start their annual audit. Greenberg said the pressure had become too much for Kusatzky, who arrived early at the office and wrote a note that he left on his boss’ desk, along with his company ID.

“I did an incredibly stupid thing,” the note read. “I hid expenses and made the [profit and loss statement] look better.”

His motive: to save his job and “to fit in,” according to the note, which was included in the Justice Department’s legal filing.

“I have always been shy and find it hard to fit in anywhere,” the note said. “I wanted to fit in -- ‘be one of the guys.’ ”

Securities regulators cleared the rest of the company’s officers of wrongdoing. Kusatzky, who lives in Illinois and works at a postal packaging service, is expected to enter his plea Jan. 10.

He still faces civil charges of fraud and insider trading filed by the Securities and Exchange Commission. A settlement in the SEC case is pending, Greenberg said.