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Monday, June 30, 1997

SEC investigates Temple-Inland Inc. for possible tax and financial reporting fraud

LUFKIN, Texas (AP) - The Securities and Exchange Commission is investigating possible income tax and financial reporting fraud at Temple-Inland Inc., according to court records.

Jeffrey S. Ammon, 38, alleges in depositions filed in a wrongful termination lawsuit that the Diboll-based corporation knowingly underpaid its federal income taxes by $80 million to $100 million and submitted false financial reports to its shareholders during one or more of the six years he worked in the company's tax department.

He filed the lawsuit Aug. 4, 1995, in Travis County, but it was transferred later that year to Angelina County, where Diboll is. In the lawsuit, Ammond contends he was fired for refusing to release allegedly false information to the Internal Revenue Service, the SEC and Temple-Inland's shareholders.

Temple-Inland denies the claim and says Ammon wasn't fired, but resigned.

Temple-Inland, whose 1997 gross sales are projected to exceed $2.8 billion, has major interests in paper, packaging, building products, timber, timber lands and financial services. Its Diboll headquarters are 104 miles north of Houston in East Texas.

The SEC issued subpoenas in April for Temple-Inland and Ammon to produce related documents "pursuant to a formal order of investigation entered by the commission" in the matter, according to documents in the file of Ammon's lawsuit.

In one subpoena, the corporation is ordered to produce "all documents related to the calculation of Temple-Inland's income tax liability," while another required Ammon to produce all documents "related to the calculation of the income tax provision in Temple-Inland's financial statements for fiscal years 1991 to the present."

In a telephone interview from his home in Ridgeland, Miss., Ammon told The Lufkin Daily News that he has talked to the IRS and SEC about his allegations.

But neither agency would comment on the matter.

"I can neither confirm nor deny the existence of any investigation," said Patricia Thompson, a branch chief in the SEC's Division of Enforcement.

Fannie Smith, assistant public affairs officer for the IRS's North Texas district, told the newspaper that privacy laws prohibit her from confirming or denying whether the IRS is investigating.

Ammon testified April 29 before state District Judge David Wilson that he already had either shared documents relating to the case or discussed their contents with the IRS, the SEC, his wife, his parents and his friends.

Wilson issued a temporary injunction ruling June 10 that prohibits Ammon from releasing any of the information to any other third parties except investigating federal agencies.

Tony Bennett, Temple-Inland's vice president of public and government affairs, and Richard Warner, the corporation's general counsel, would not comment on any aspect of the case.

"The company has a policy whereby it does not comment on specific allegations in matters which are the subject of pending litigation," Warner said in a statement. "The company, however, is prepared to and is in the process, as a part of the litigation, of fully defending both the lawsuit and the allegations contained in it.

"The company is confident that upon the ultimate trial of the issues raised, that none of the allegations which Mr. Ammon has raised will be found to have any merit or grounds whatsoever."

The case is set for trial beginning Dec. 16. Send a Letter to the Editor about This Story | Start or Join A Discussion about This Story
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