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A Fulton County State Court judge has added a $60 million bill to the woes faced by two former Safety-Kleen executives for their parts in the waste management company’s accounting scandal five years ago. Judge Susan B. Forsling on Oct. 26 granted default judgments to PricewaterhouseCoopers, which had pursued third-party claims against Safety-Kleen’s former chief executive officer, Kenneth W. Winger, and the company’s former chief financial officer, Paul R. Humphreys. The accounting firm wanted the pair to contribute to its $87.5 million settlement with lenders who had sued over Safety-Kleen’s financial meltdown. A spokesman for Pricewaterhouse-Coopers did not respond to questions by press time. Michael P. Kenny of Alston & Bird, one of the accounting firm’s local lawyers, could not be reached. Neither Winger nor Humphreys participated in any meaningful way in the litigation borne out of the company’s 2000 bankruptcy. Winger took no actions to defend himself, while Humphreys’ participation consisted of a one-page answer and a compelled deposition appearance in which he asserted his Fifth Amendment right against self-incrimination. According to complaints filed in the case, both men live in Canada. There were no attorney appearances on record for either defendant, and neither could be reached to discuss the case. A federal grand jury in the Southern District of New York indicted Humphreys in December 2002 for allegedly orchestrating an accounting scheme at Safety-Kleen. A spokeswoman for the U.S. Attorney’s Office in Manhattan said prosecutors are seeking to extradite Humphreys from Canada. Efforts to contact Winger’s former attorney, Peter L. Murphy of Columbia, S.C., were not successful. In September, the South Carolina Supreme Court suspended the lawyer indefinitely. Gary C. Pennington, a Columbia attorney appointed to assume responsibility for Murphy’s clients, had no further information. Forsling took judicial notice of the findings in a related federal case in South Carolina. In a suit brought by Safety-Kleen bondholders, South Carolina District Court Chief Judge Joseph F. Anderson Jr. entered a $200 million judgment against Winger and Humphreys earlier this year. After seven weeks of trial, Anderson opted to take the case out of the hands of the jury and entered a judgment as a matter of law against the two former executives. As in Fulton, neither defendant participated in the South Carolina trial. A HOSTILE TAKEOVER The Fulton litigation grew out of the 1998 hostile takeover of Safety-Kleen Corp. by Columbia, S.C.-based Laidlaw Environmental Services. The transaction was financed primarily with $2.1 billion from a syndicate of lenders led by Toronto Dominion Bank. Those lenders said they provided the money for the initial transaction — and subsequently advanced the newly formed company more than $280 million — because they believed Safety-Kleen was financially healthy. However, following accounting adjustments of more than $500 million from 1997 through 1999 at Safety-Kleen, bank officials came to believe they had been misled by the company’s auditor, PricewaterhouseCoopers. The syndicate of banks filed suit against the accounting firm in Fulton State Court, alleging a single count of negligent misrepresentation. Humphreys and Winger were named as third-party defendants. Toronto Dominion v. PricewaterhouseCoopers, No. 00VS012679 (Fult. St. filed Dec. 13, 2000). Safety-Kleen is based in Plano, Texas, and none of the alleged acts occurred in Georgia. But attorneys for the banks said they chose Fulton because PricewaterhouseCoopers has an office in Atlanta and some of the financial institutions that participated in the syndicate have offices there. Also, Georgia courts did not apply the doctrine of forum non conveniens at the time the case was filed, the lawyers said. Last year the case was headed for a three-month trial when the banks agreed to settle the claim against PricewaterhouseCoopers for $87.5 million. Last week’s two $30 million default judgments were the result of claims for contribution brought against Winger and Humphreys by PricewaterhouseCoopers. SEC SANCTIONS In addition to their other legal woes, the U.S. Securities and Exchange Commission successfully sought sanctions against Winger and Humphreys in 2002. In the SEC complaint, the government lawyers alleged that the executives “engaged in a massive accounting fraud by materially overstating the company’s revenue and earnings in periodic reports filed with the Commission and in press releases issued by the company.” U.S. District Judge Charles S. Haight Jr. of the Southern District of New York subsequently barred Winger and Humphreys from serving as officers or directors at any public company. The federal judge also ordered Winger to pay $440,000 in disgorgement, pre-judgment interest and civil penalties; he ordered Humphreys to pay $150,000. At the end of 2003, Safety-Kleen emerged from Chapter 11 bankruptcy as a private company with a total senior secured financing package worth $295 million. The company has approximately 4,500 employees and generated $850 million in revenue in 2003.

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