FalconStor federal bribery probe continues
Melville-based FalconStor, which has yet to settle a federal probe into alleged actions by an ex-chief executive, said Tuesday that it had hired three executives to focus on international sales and cost-cutting. (Nov. 8, 2011) Credit: Steve Pfost
FalconStor Software Inc. Tuesday bolstered its top management but said it had yet to resolve a federal bribery investigation centered on a former chief executive.
Federal authorities are probing a multimillion-dollar bribery scheme in which ReiJane Huai, former head of the Melville data protection company, allegedly paid bribes in return for $11.3 million in software contracts during 2008 and 2009. Huai left FalconStor in 2010, and killed himself in September, a day before he was to plead guilty, law enforcement sources told Newsday at the time.
Huai's successor as FalconStor chief executive, James P. McNiel, told stock analysts Tuesday the company has spent $4.3 million on the probe, including $531,507 in the July-September quarter. FalconStor has said it is cooperating fully with investigators.
Asked by analysts on an earnings call when and if there would be settlement, McNiel said, "There's nothing new we can report."
Earlier this year the company set aside $2.2 million for a potential resolution of the case.
FalconStor also has hired three executives to focus on accounting and international sales.
Bryan Urquhart will be chief financial officer, succeeding James Weber, who will now focus exclusively on operations as a vice president. Urquhart previously worked at Intergraph Corp. and the former Computer Associates International, based in Islandia.
Philippe Bernard will oversee FalconStor's sales in Europe, the Middle East and Africa, while Suresh Nair will be responsible for sales in Asia.
FalconStor, which employs 501 people, half of them on Long Island, specializes in disk-based software that protects data stored on computers.
Separately Tuesday, the company said losses for the July-September period shrank to $5.4 million from $26.4 million a year earlier. Sales declined to $18.9 million from $19 million.
McNiel said FalconStor was focused on growing sales internationally and containing expenses. "I believe we could be the next $1-billion software company on Long Island," he said in an interview. FalconStor's annual sales totaled $83 million last year.
Have a whirlwind weekend in Saratoga with Newsday travel reporter Scott Vogel
Have a whirlwind weekend in Saratoga with Newsday travel reporter Scott Vogel