Criminal Complaint In Insider Trading Case

Manipulating revenue to make your numbers has tripped up many an executive, and John N. Milne is no exception, according to federal authorities.

A federal grand jury in New Haven has indicted John N. Milne, the former chief financial officer of equipment leasing company United Rentals Inc., on eight counts of insider trading and securities fraud.

Nora R. Dannehy, Acting U.S. Attorney for the District of Connecticut, accused Milne of relying on insider information to sell some 850,000 shares of company stock, gaining him $22.3 million. Milne, a Canadian citizen, was arraigned last Friday; after surrendering his passport, he was released on $1 million bond.

Milne, 48, who has denied the allegations, is also charged, in a separate civil complaint, of securities fraud, insider trading, and making false statements to the Securities and Exchange Commission.

Securities regulators allege that from 2000 through 2002, Milne carried out a fraudulent scheme through "minor sale-leasebacks" that allowed United Rentals, which rented everything from heavy machines to hand tools, to recognize revenues early and to inflate profits generated from sales.

United Rentals, which had no immediate comment, fired Milne in August 2005 when he refused to answer securities regulators' questions.

If convicted, Milne could face a maximum prison term of 75 years and a fine of more than $13 million as well as a forfeiture of some $17 million, which the government said represents his proceeds from the alleged conspiracy and insider trading.

Last December, Michael J. Nolan, also a former chief financial officer of United Rentals, settled the S.E.C.'s charges of filing falsified documents with it. He also admitted that he filed false documents with the S.E.C., a charge that could bring a 10-year prison term and a $22 million fine. Federal authorities said he owes $1 million in restitution.

by Elizabeth Olson