Former Charter Communications Inc. chief operating officer Dave Barford and
former chief financial officer Kent Kalkwarf pleaded not guilty to 14 counts of
mail fraud, wire fraud and conspiracy to commit wire fraud before U.S.
Magistrate Judge David Noce Tuesday morning in St. Louis, as expected.
Barford and Kalkwarf were indicted July 24 along with two other former
Charter executives -- former Eastern division senior vice president David McCall
and former Western division senior VP James "Trey" Smith -- and charged with
being involved in a scheme to defraud Charter investors by inflating subscriber
numbers in 2001 and in the first quarter of 2002 and cash-flow figures in
2000.
McCall pleaded guilty to one count of conspiracy to commit wire fraud Friday.
His sentencing is scheduled for Oct. 17.
Smith pleaded not guilty Monday to eight counts of wire fraud and
conspiracy.
According to the indictment, Barford and Kalkwarf allegedly engineered a
scheme to artificially boost subscriber numbers by "managing disconnects," or
continuing to include disconnected customers on Charter’s books, delaying
disconnects for subscribers who had either requested to discontinue service or
who had not paid for service, as well as creating completely fictitious
subscribers.
The two executives also allegedly hatched a scheme to increase Charter’s
cash-flow results by paying digital set-top-box suppliers an extra $20 per box,
then receiving that money back as advertising fees. According to the indictment,
that plan artificially increased Charter’s cash flow by about $17 million in
2000.
“The indictment arises out of collective accounting and business judgments at Charter," said Jeff Demerath, Barford's attorney. "Mr. Barford’s actions were legal and were undertaken with the authorization, approval and consent of his superiors at Charter, including the board of directors.”
