DETROIT -- Opening statements in the civil fraud case of former Delphi CEO J.T. Battenberg III are scheduled for Friday morning.
The U.S. Securities & Exchange Commission in 2006 sued Battenberg and other former executives of the parts supplier, alleging that they intentionally mislead investors through transactions intended to inflate the supplier’s earnings from 2000 through 2004.
U.S. District Judge Avern Cohn today finished seating the 10-person jury that will decide the case. The panel of six men and four women include a retired cardiology nurse, a manager at a JC Penney store, a teacher at a Montessori school and a Ford Motor Co. retiree who’s a part-time information-technology consultant.
Battenberg, in a charcoal-gray suit, sat at the front of Cohn’s courtroom, occasionally smiling at banter between the 86-year-old judge and prospective jurors. He sat with his lead lawyer, William H. Jeffress Jr., of Baker Botts LLP in Washington, D.C.
Jeffress has tried dozens of high-profile civil and criminal cases. In 2007 he represented ex-White House aide I. Lewis (Scooter) Libby, who was convicted of lying to a grand jury during a criminal investigation into the leaked identity of a CIA officer. He also helped win a Supreme Court ruling for former President Richard Nixon involving public access to the Watergate tapes.
The SEC’s civil suit accuses Battenberg of improperly accounting for $237 million in payments for warranty claims to General Motors in 2000. Battenberg and other executives struck an “asymmetrical accounting” arrangement with GM, whereby Delphi booked the warranty payments as pension and retiree costs related to the supplier’s 1999 spinoff from GM, the SEC alleges.
Battenberg bristled at those warranty payments, according to the SEC’s complaint, because they occurred while Delphi was still part of GM. But he and other executives decided to handle the matter with GM quietly, rather than picking a public spat with Delphi’s former parent and largest customer, the government alleges.
After the allegations became public, Battenberg emphatically denied there was anything improper about the settlement with GM and vowed to fight the charges.
Others on trial
Also on trial are Paul Free, former Delphi controller and chief accounting officer; Milan Belans, former director of capital planning and pension analysis; and Catherine Rozanski, former accounting director. All were in the courtroom today.
Another allegation, not involving Battenberg, is that Delphi is accused of selling $270 million worth of inventory in the fourth quarter of 2000 in two transactions, and agreeing to buy it back with interest the following quarter. The SEC says that alleged scheme was engineered in part by Free and Belans and was intended to inflate Delphi’s earnings.
The government is seeking unspecified fines from the defendants. None face criminal charges.
Thirteen Delphi officials originally were charged in the case; nine of them paid fines to settle with the SEC.
Delphi entered bankruptcy in 2005 and emerged in 2009 as DPH Holdings Corp. Most of the assets of the pre-bankruptcy company were acquired by private investors and now exists as Delphi Automotive LLP of suburban Detroit. The company has about $11 billion in annual revenue and 100,000 employees.