Former EM.TV Execs Found Guilty Of Fraud
Brothers Thomas and Florian Haffa, formerly top executives of German kids television group EM.TV, were found guilty April 8, 2003 of fraud and fined $1.5M, according to the HOLLYWOOD REPORTER. Munich judge Huberta Knoeringer said the Haffas deliberately misrepresented EM.TV's finances to manipulate the company's share price and dismissed their claim that mistakes were made because of confusing international accounting procedures and business practices common to the media industry. Thomas Haffa, founder/CEO of EM.TV, was ordered to pay $1.3M while Florian, former CFO, must pay $250,000. The prosecuting attorney Peter Noll had asked for much higher fines and wanted them placed on eight months probation. The Haffas' lawyer Rainer Hamm is appealing the verdict.
EM.TV rose rapidly in the late 1990s from a merchandising company to produce and distribute kids shows and went on a buying spree, overpaying for assets such as the Jim Henson Co. ($680M) and a 50% stake in the Formula One race-car circuit ($1.5 billion). The EM.TV trial lasted for five months and is seen as a possible precedent for other corporate fraud trials in Germany. In August 2000, EM.TV published half-year figures that grossly inflated its revenue and profits. The numbers were later corrected downward in October and December. Thomas Haffa sold 200,000 shares worth of EM.TV stock for almost $20M earlier in 2000. EM.TV forecast a pretax profit of $240M, but ultimately booked a net loss of just under $1.5 billion.