Twin Suits Accuse Oracle of Cooking the Books

SAN FRANCISCO (CN) — Still reeling from losing a $9 billion copyright battle to Google last month, Oracle was hit with two lawsuits this week accusing it of whistleblower retaliation and securities fraud.

Oracle's former senior finance manager, Svetlana Blackburn, sued the technology giant in Federal Court on Wednesday, claiming the company fired her for threatening to blow the whistle on its illegal accounting practices.

A day later, an investor named Grover Klarfeld slapped Oracle with a securities class action, saying the company misled investors by artificially inflating its revenues.

Blackburn says she was ordered to add millions of dollars in accruals to Oracle's Cloud Services financial reports, despite a lack of billings to support those numbers.

"The data, she knew, would end up in SEC filings and be touted on earnings calls, used to paint a rosier picture than actually existed on the ground," Blackburn says in her nine-page lawsuit.

After she refused to fudge the numbers, her superiors added the baseless revenues on their own, she claims.

Blackburn put her superiors, a fellow finance manager and the company's assistant controller on notice about the unjustified numbers, but no action was taken, according to her lawsuit.

"As plaintiff continued to resist and warn of the accounting improprieties, she became more of a roadblock than a team player who would blindly generate financial reports using improper bases in order to justify the bottom lines that her superiors demanded to see," the complaint states.

Because she refused to cook the books and threatened to blow the whistle, Blackburn says she was fired on Oct. 15, 2015.

Her lawsuit accuses the company of wrongful termination and three counts of unlawful retaliation against an employee under state and federal law. She seeks punitive damages.

On Thursday, Klarfield lodged his class-action complaint in Federal Court, claiming revelations from Blackburn's lawsuit caused Oracle's stock price to fall by $1.60, or 3.97 percent.

Klarfield's suit claims Oracle filed fraudulent reports with the Securities Exchange Commission in August and December 2015, stating Oracle's Cloud Services revenues rose 34 percent in both quarters.

The class-action lawsuit names Oracle, its chief technology officer Larry Ellison and co-CEOs Mark Hurd and Safra Catz as defendants. It accuses them of two counts of securities violations.

"As officers and/or directors of a publicly-held company, the individual defendants had a duty to disseminate timely, accurate, and truthful information with respect to Oracle's businesses, operations, future financial condition and future prospects," Klarfield says in his 19-page complaint.

Oracle spokeswoman Deborah Hellinger did not immediately respond to a Friday morning phone call seeking comment on the lawsuits.

Blackburn is represented by Daniel Velton of Velton Zegelman in Sunnyvale, Calif. Klarfield is represented by Jennifer Pafti of Pomerantz in Beverly Hills, Calif.

A jury found last month that Google did not infringe Oracle's copyrights by using 37 Java interfaces in its Android smartphone system because it was fair use.

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