Thursday, April 1, 2010

MOD Systems: Arrest a "Distraction"

Seattle-based MOD Systems has responded to the arrest of its former CEO, Mark Phillips, saying in a statement Wednesday that in spite of the "distraction" of the arrest of its former CEO, the firm has the "full support" of its investors and strategic partners. Phillips was arrested Tuesday and charged with wire fraud by the U.S. Attorney's office, over misappropriation of corporate funds. According to MOD Systems, the arrest came as a result of an investigation by an independent committee established by its board of directors, headed by Lane Powell PC and Tatum, LLC, which found that former CEO Mark Phillips and former VP of Finance Kenn Gordon misappropriated corporate funds; misused MOD employees, assets and resources; and engaged in personal behavior contrary to the best interests of MOD and its shareholders. The board--which, at that time, included both Phillips and Gordon--had created the independent committee after a shareholder, Robert Arnold, alleged wrongdoing by the two. MOD says it is continuing to pursue legal recourse against Phillips to recoup $1.3M in misappropriated funds.