Integral places vice president on paid leave

November 08, 2006|By Hanah Cho | Hanah Cho,Sun reporter

Lanham-based Integral Systems has placed an executive vice president on paid leave in connection with internal and regulatory inquiries into the company's corporate governance, including disclosures related to the executive's felony conviction, according to documents filed with the Securities and Exchange Commission yesterday.

Gary A. Prince, also Integral Systems' managing director of operations, pleaded guilty to conspiracy to commit securities and bank fraud in 1995, according to SEC documents. His crimes occurred when he was working at Financial News Network and United Press International in the late 1980 and early 1990s, a period when he also served on Integral's board of directors. He served two months in prison in 1998.

Neither Prince nor other company officials could be reached last night. In its filing, the company said that the board's decision to put Prince on leave "does not represent any determination by the company" that he did anything wrong.

The satellite maker disclosed Prince's conviction in August when it announced his promotion to executive vice president. Prince has been involved with the company as an officer, director or consultant for most of its 24-year history and was re-hired in 1998 shortly after his release from federal prison, SEC filings show.

In its August filing, Integral said the board "believes that Mr. Prince's appointment as an executive vice president of the company is justified given the expertise and knowledge that he will bring to the company in his new position."

Integral disclosed in May that the SEC and Nasdaq had informally inquired about the circumstances surrounding a former director's resignation from the board this year. Bonnie K. Wachtel had expressed concerns about the company's corporate governance, including what she said was a lack of prompt disclosure to the board last year that the company's then-Chief Executive Officer Steven R. Chamberlain was facing criminal charges of sexual misconduct with a teenage neighbor in Howard County.

In a January letter to fellow directors that focused largely on Chamberlain, Wachtel expressed concern that Prince was acting as one of the company's top officials without his role being disclosed to shareholders.

Chamberlain, who resigned in April, was sentenced to a suspended one-year prison term in May after pleading guilty to fourth-degree sex offense.

The satellite maker had been under pressure from large shareholders to put itself for sale and hired an investment bank in April to start the process. The company said last month that discussions with potential interested parties have not come to fruition but it will continue to explore "other strategic alternatives to maximize stockholder value," according to SEC documents.

"My concerns would be best addressed by a change of [management] control, and I remain hopeful that the investment banking process begun this year will lead to that conclusion," Wachtel said last night.

hanah.cho@baltsun.com

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