Peregrine’s Former European Vice President Pleads Guilty to Wire Fraud

San Diego, CA - United States Attorney Karen P. Hewitt announced that today Jeremy R. Crook, a former executive of Peregrine Systems, Inc. (“Peregrine”), entered a guilty plea in federal court in San Diego to one count of the Third Superseding Indictment charging him with wire fraud. The guilty plea was taken by United States District Court Judge Thomas J. Whelan, who scheduled a sentencing hearing for May 4, 2009 at 9:00 a.m.

As Crook admitted in his plea agreement and during the plea hearing today, Peregrine was previously a publicly-traded software company based in San Diego, California, with shares of common stock traded on the NASDAQ. Crook was hired in November 1998 as Vice President of Peregrine’s European operations, and worked out of Peregrine’s offices in the United Kingdom.

Crook admitted in his plea agreement that Peregrine’s reported revenues greatly influenced the company’s stock price, such that if Peregrine failed to meet revenue expectations the stock’s value would sharply decline. Crook admitted that, in order to inflate the company’s revenues, he participated with other Peregrine executives in the fraudulent booking of revenue from a proposed £10 million transaction with British Telecom PLC (“BT”). In January 2001, in order to convince BT to sign a backdated contract for this deal, Crook and others granted BT a 30-day “money back guarantee,” which gave BT an “out” that it could exercise for any reason. Despite the fact that this contract was executed outside the December 2000 fiscal quarter, and could be canceled for any reason within 30 days, Crook and his co-schemers caused Peregrine to fraudulently book the revenue. Moreover, several times throughout 2001, BT exercised its right to cancel this contract with Peregrine. Each time, in an effort to induce BT to continue acting as if a binding contract existed between the parties, Crook and his co-schemers extended the deadline for the cancellation clause.

Crook admitted knowing that Peregrine’s publicly-reported revenues were false and misleading, and that the concessions granted to BT were done to avoid a restatement.

Crook was extradited from the United Kingdom to San Diego, California, in September 2006, to face charges resulting from his activities at Peregrine. United States Attorney Hewitt expressed her deep appreciation to the United Kingdom authorities for their assistance in this significant corporate fraud prosecution.

DEFENDANT CASE NUMBER: 04CR2605-W (4)
Jeremy R. Crook United Kingdom Age: 55

SUMMARY OF CHARGES
Count 20: Wire Fraud - Title 18, United States Code, Section 1343.
Maximum Penalties: 5 years’ imprisonment and $250,000 fine

INVESTIGATING AGENCY
Federal Bureau of Investigation