SEC Files Lawsuit Against Former Peregrine Manager

Federal regulators said Friday that they filed suit against a former senior treasury manager at Peregrine Systems Inc. over her alleged role in the company’s improper recording of revenue.

In a civil lawsuit filed by the Securities and Exchange Commission, Ilse Cappel, who worked at the San Diego-based software firm from 1993 to June 2002, also was accused of illegal insider trading.

Larry West, an SEC enforcement attorney, said the civil complaint is the first such action involving its ongoing investigation of accounting practices at Peregrine, which filed for bankruptcy protection in September.

The SEC accused Cappel of acting with other executives, including the company’s chief financial officer, in a scheme to hide the company’s difficulties in collecting its accounts receivable.

“Those difficulties arose because Peregrine recorded revenue on contingent sales and other non-binding arrangements it entered into with customers,� the SEC said in the complaint.

The SEC said Cappel’s part was only “one portion of the wide-ranging fraud� by the company, which had said earlier this year that it had incorrectly booked as much as $100 million in revenue over nearly three years.

Cappel’s attorney, Michael Lipman, said he anticipates a resolution of the SEC matter.

“While working at Peregrine, my client made some mistakes and bad judgment calls,� Lipman said. “She has been candid in discussing these events with the government and will continue to do so,� Lipman said.

The company said it also is under investigation by the Department of Justice for its accounting practices.

Cappel sold more than 16,000 shares of Peregrine stock from March 1999 to January 2002 for proceeds of $334,287, while she allegedly had nonpublic information about the accounting irregularities and the company’s true financial condition, the SEC alleges.