Thompson's firm paid to settle fraud

WASHINGTON -- The leader of President Bush's new task force on corporate crime was a director of a credit card company that paid more than $400 million to settle charges of consumer and securities fraud.

Larry Thompson, the deputy attorney general, served on the board of the company, Providian Financial Corp., from June 1997 until he was confirmed by the Senate in May 2001, according to Securities and Exchange Commission documents.

During that period, state, local and federal agencies investigated Providian for gouging its customers, who filed class-action lawsuits against the company. Providian paid more than $400 million in 2000 to settle the investigations and lawsuits.

During the first two weeks in 1999 after the government investigations were disclosed, the company's shares plunged from $62.06 to as low as $39.22.

In March, Providian agreed to pay $38 million to settle a class-action lawsuit filed by shareholders alleging the company inflated its profits through its price-gouging practices.

The settlement covered investors who bought the company's stock between Jan. 21, 1999 and June 4, 1999, when Thompson was a company director.

The Washington Post, which first reported Thompson's connection with the credit card company, said he held 89,651 shares of Providian on March 21. Those shares were valued at more than $4.7 million on the day he took office as deputy attorney general.

Thompson was not questioned about his role at Providian during his Senate confirmation hearings.

Providian's officers and directors, including Thompson, are defendants in a class-action lawsuit brought by company employees who claim they urged large holdings of Providian stock in 401(k) retirement plans while they were employing questionable accounting methods and cashing in on their own shares.

Justice Department spokesman Mark Corallo said Thompson was proud of his service on Providian's board.

"He only became aware of the (fraud) issues when regulators began to make inquiries," Corallo told the Post. "He then personally took the lead in making the company doing the right thing."

Bush established the white-collar crime task force Tuesday amid mounting corporate scandals. He gave Thompson until July 19 to convene its first meeting. But in a surprise move, he held the first session on Friday at the White House.

At the meeting, Thompson pledged to go after corporate criminals "with vigor and an aggressive manner."