Backup solutions vendor FalconStor had a run in with the law three years ago, when it was discovered that founding CEO ReiJane Huai and two other executives committed bribery to illegitimately obtain contracts for their firm.
The client in question was JP Morgan. Over $300,000 in illicit compensation exchanged hands between ReiJane and his colleagues and their counterparts at the financial service’s IT department, as we’ve discovered two years after the fact.
The estimated value of this ‘cooperation’ was $12 million, not including the bribes. In June last year a Brooklyn court fined FalconStor for half of that sum, and this week the company paid its way out of this mess by shelling out another $5 million to settle a different lawsuit.
The company provided all the details about the class-action suit in a release sent out yesterday.
“The agreement to settle the class action lawsuit represents another significant step forward for our Company and our shareholders. As a result, we have emerged as a stronger company, better equipped than ever to continue the technological innovation for which we are known and to increase shareholder value,” said Jim McNiel, president and chief executive officer of FalconStor. “The improper acts of a few individuals that resulted in the government investigations and the class action lawsuit were contrary to our core values and ethical policies. Over the last two years, we have taken aggressive measures to improve and to strengthen our business processes and compliance programs.”
FalconStor’s bottom line is certainly feeling the blow, but shareholders can relax knowing that there won’t be any more unpleasant surprises in the foreseeable future. Last month the company signed an important agreement with dataStor, a major Australian distributor through which it gained entry to the ANZ market.