The Courier-Journal from Louisville, Kentucky • Page F2

THE COURIER-JOURNAL www.courier-journal.com F2 I nside usiness NATIONAL DIGEST Columbia House to market video games Columbia House, known for offering CDs and videos for pennies to new club members, is offeringvideo games. Starting yesterday, The Columbia House Co. is makingvideo games available to people who buy DVDs. Music club members will follow in July, when the games will be available to about 11million members of both clubs. Columbia will team with Majesco, which publishes such games as Solider of Fortune and F-14 Tomcat, to market the games.

Majesco also intends to make games from other publishers available to Columbia club members, including new releases, preorders and older titles. has new line: Corp. unveiled a new advertising theme yesterday intended to attract younger and hipper consumers: The slogan will replace love to see you this fall and be used as the tag line for its marketing efforts worldwide for the next two years. executives, who announced the tag line at a gathering of top managers and marketing con- sultantsin Chicago, said intended to helpthe restaurant chain connect better with customers especially young adults, moms and kids. The theme was developed by Heye and Partner of Munich, Germany one of 14 ad agencies asked to submit proposals for a new campaign.

The marketing strategy is the latest move by new management to revitalize an iconic brand that has lost some of its luster. shares fell 3 cents yesterday to close at $21.64. ranks grow slower The ranks of the millionaires increased in 2002, but at a slower pace than in the past because of weak global economies and stock market declines. An annual study released yesterday estimates that 7.3 million people in the world had financial assets of $1million or more at the end of 2002, up 2 percent from the previous year. The increase, down from a 3 percent rate in 2001, was the lowest rate of increase in the seven-year history.

The numberof millionaires dropped last year in North America and Latin America, but rose in other regions. The World Wealth Report was prepared by the Merrill Lynch brokerage and the Cap Gemini Ernst Young consulting firm. OPEC to maintain production levels OPEC producers meeting yesterday in Doha, Qatar, agreed to maintain production levels through the end of next month, when they plan to meet again to assess the effect of increasing Iraqi oil exports. The possibility that the Organization of Petroleum Exporting Countries could cut production at its next meeting on July 31helped push oil prices above $32 a barrel in New York for the first time since mid- March. OPEC urged its membersto stop exceeding their production quotas.

Attracted by high prices, the 10 OPEC nations, excluding Iraq, have exceeded their designated quotas by 1.5 million barrels a day, according to Obaid bin Saif al-Nass- eri, oil minister of the United Arab Emirates. Yesterday, July contracts of light sweet crude finished up 63 cents at $32.36 on the New York Mercantile Exchange. The last time oil futures closed higher than $32 a barrel was March 17, a few days before the start of the war in Iraq. Union endspicketing of Evergreen ships A dock union has stop- pedpicketing a shipping company yesterday, ending a four-week standoff that crippled the Atlantic seaboard operations. The break came Tuesday, when Evergreen Marine Corp.

withdrew a labor complaint it filed against the International Association, leading to overnight talks with the union and an agreement to negotiate a contract with five office workers at U.S. headquarters in Morristown, N.J. Evergreen said yesterday that two ships stranded at Port Newark in New Jersey as well a dozen other ships on the East coast were being unloaded by the ILA. The impasse had left Evergreen unable to say when it could deliver tens of thousands of containers of imported goods for U.S. retailers.

NEW YORK The seven-year prison sentence for ImClone Systems founder Sam Waksal sends a message that his friend Martha Stewart get off easy if she is convicted in the insider- trading scandal, legal experts said yesterday. The sentence imposed on Waksal, who was also ordered to pay more than $4.2 million, could increase the chances that Stewart indicted last week on five counts related to her sale of the stock will try to avoid prison time with a plea bargain, one expert said. has to be in the back of said David Marder, a former Securities and Exchange Commission lawyer. seeing here is the judges being willing to impose harsh for white-collar criminals. Waksal was sentenced to seven years and three months in federal prison after admitting that he told his daughter to sell ImClone stock ahead of a negative government decision about the ImClone cancer drug Erbitux.

The punishment was the maximum under federal guidelines used by judges to determine sentences. Stewart is accused by federal prosecutors of selling her own ImClone shares on Dec. 27, 2001, because she received word from her stockbroker that the Waksals were trying to sell. She has pleaded innocent. The Waksal sentence is significant because it sets a harsh tone for the executives accused in white-collar scandals that have unfolded since the fall of En- ron in 2001, legal experts said.

public is tired of seeing CEOs and high-profile executives getting slaps on the wrist, and this judge (U.S. District Judge William H. Pauley) is sending a message that not going to be that way Marder said. That message likely was not lost on Stewart, a longtime friend of Waksal, said Frank Razzano, a former federal prosecutor and assistant chief trial lawyer for the SEC. think what it says is if convicted of these crimes, going to do time in Razzano said.

If lawyers are seeking a deal with federal prosecutors, they have not tipped their hand. The public face of defense has been an aggressive campaign designed to convince the public she is innocent. Anna Cordasco, a Stewart spokeswoman, declined to comment on the Wak- sal sentence. The cases against Stewart and Wak- sal, as sketched out by federal prosecutors, have similarities. Prosecutors say Waksal allowed his daughter to pocket about $600,000 by tipping her off, and they say Stewart pocketed about $45,000 by dumping Im- Clone early.

The sums are a far cry from the mul- timillion-dollar fraud at companies such as Enron and WorldCom. But in both the Stewart and Waksal cases, prosecutors say the defendants compounded their crimes by lying to investigators. Prosecutor Michael Schachter, who is handling both cases, told the judge that Waksal deserved a tough sentence because he told separate and distinct sets of And at a press conference announcing the Stewart indictment, U.S. Attorney James Comey said that case was lying lying to the FBI, lying to the SEC and investors. That is conduct that will not be Stewart was not charged with insider trading.

All the charges against her contain accusations that she made misleading statements or told outright lies. her principal Razzano said. think she would have avoided indictment if have just shut her mouth when the government came knocking on the Martha Stewart get off easy if she is convicted in the insider-trading scandal, said legal experts. jail time sends message to Stewart By ERIN McCLAM Associated Press ASSOCIATED PRESS WASHINGTON Federal prosecutors have opened a criminal investigation into possible misconduct at Freddie Mac, the home-mortgage giant whose accounting practices already were being probed by other U.S. authorities.

The diaries of former president David Glenn, who was fired on Monday, are drawing interest. news of the criminal inquiry came two days after the government-sponsored company shook up its top leadership because of accounting problems, jolting the stock market and raising con- cernsabout a possible effect on the housing market. U.S. Attorney Paul McNulty would not comment beyond confirming the criminal investigation. The McLean, company said it was not aware of the investigation but would cooperate in all respects.

Freddie Mac, one of the biggest corporations with its stock widely traded, also is being investigated by the Securities and Exchange Commission and by the Office of Federal Housing Enterprise Oversight. The oversight agency supervises both Freddie Mac and Fannie Mae, its larger sister in the multitrillion-dollar home-mortgage market. In a surprise announcement, Freddie Mac said Monday that it had sacked Glenn, who also was chief operating officer, because he fully cooperate with an internal review of the books. Chairman and Chief Executive Leland Brendsel and Vaughn Clarke, the chief financial officer, resigned. The company disclosed yesterday that the informal inquiry begun in January has now become a formal investigation, allowing the agency to issue subpoenas for witnesses and documents.

Shaun chairman of Freddie board of directors, said the company would cooperate fully. He said an internal company review found that no employee other than Glenn had engaged in allegedly irregular activities involving documents. can also confirm that the conduct we disclosed on Monday related to Mr. diaries and not to company accounting said. The diaries were said to be missing some pages and other pages had been altered.

Details of the criminal investigation immediately available. The company believe that fraud or criminal misconduct were involved, said Gregory Parseghian, Freddie new chief executive officer, in a conference call Monday with shareholders and financial analysts. Freddie Mac restated its earnings for 2000-2002 in January, after its new auditor recommended changes to its accounting policies to reflect higher earnings from the complex financial instruments called derivatives. Freddie Macfired now-fallen Arthur Andersen LLP as its auditor in March 2002, replacing it with PricewaterhouseCoopers. Federal Reserve Governor Susan Bies said yesterday that Freddie accounting travails had an immediate effect on the U.S.

banking system or the housing market one of the few bright spots and that consumers feel any negative effect. housing market is still very Bies said. banks as a whole are very liquid right now. They have plenty of room to extend credit. So I seen any signs that there will be a short-run Freddie Mac shares fell $1.50 yesterday, to close at $50 on the New York Stock Exchange after official acknowledgment of the criminal investigation.

The announcement that it will buy back as much as $10 billion of its own notes in the next two days helped bring a measure of stability to an edgy market in the securities of Freddie Mac and Fannie Mae, financial experts said. Criminal investigation of Freddie Mac opened Former diaries were altered, according to one report By MARCY GORDON Associated Press RENO, Nev. For decades in Reno, business success was based on a simple formula: Keep indoors. It was heresy to suggest that the gambling business could profit from letting customers slip away from the slot machines and blackjack tables. Now, as competition grows from casinos on Indian lands in nearby California and elsewhere, Reno sees its future in luring people who want, at least part of the time, to be outdoors hiking in the Sierras, rafting on the Truckee River or mountain biking at Lake Tahoe.

The latest push is a 24-mile whitewater recreation corridor that would include a permanent kayaking slalom course through downtown Reno. It should carry a younger, more athletic crowd to a town where the customer base had been turning geriatric. and Eldorado hotel-casinos each are chipping in $500,000 for the $22 million project, which should be started this summer. is changing. Reno is no longer a senior slots said Ferenc Szony, president of the Sands Regency hotel-casino.

is world-class skiing and mountain biking and golf courses. In 20 minutes travel time from any hotel, you can be fly fishing on the Truckee he said. Then Szony suggests the once-unspeakable: you gamble, you gamble. If you OK William Eadington, an economics professor who directs the University of Institute for the Study of Gambling and Commercial Gaming, first sounded the alarm on the effect of new competition for Reno. He thinks attracting outdoors enthusiasts is a good idea but cautions against assuming it will replace all the lost business.

is no silver bullet, but every little bit Eadington said. Paddle sports represent a desirable said Jim Litchfield, an avid kayaker who is a member of the Truckee River Whitewater Steering Committee. research shows the 25 to 54 age group, educated people, often someone with a family with a household income of $75,000 to $125,000 who is ready to spend money on he said. a casino, a guy with disposable income who thinks he can beat the More than 33 million Americans participate in whitewater sports, said Bruce Bommarito, executive director of Commission on Tourism. He is a former vice president at Caesars Tahoe and worked at a casino in Biloxi, Miss.

revenue is supported by all kinds of things fishing, festivals, backpackers, river rafters. They all Bommarito said. Nevada and the Reno-Tahoe area have stepped up marketing the outdoors. A $3 million statewide campaign launched a year ago touted Nevada as the adventure state in the lower The Truckee River also has been the focal point the past eight years of Artown festival, featuring arts and cultural exhibits and performances. A park and amphitheater on a downtown island is the site of the whitewater park that would welcome rafters and inner-tubers.

Lt. Gov. Lorraine Hunt, a former nightclub singer who performed in Reno casinos in the 1960s, predicts the park will bring international attention. will be the only kayaking slalom course with an urban she said. will be a major, major shot in the arm Lynn Zonge, a former Grand Canyon river guide who moved to the Reno area in 1989, said the Truckee match the grandeur of the Grand Colorado River, but it beautiful, has clean water and is extremely just anywhere in the world where you can get out of your kayak and walk over and get a latte or walk a block to your room with a hot she said.

An industry consultant told the American Gaming Summit in Las Vegas in January that Reno is most vulnerable community in the United to the spread of Indian casinos. will have great difficulties in maintaining its market said Steve Rittvo, president of The Innovation Group in New Orleans. Fifty-two tribal casinos with slot machines operate in California, including the Cache Creek casino an hour west of Sacramento. Reno bets on outdoor fun to protect gambling income ASSOCIATED PRESS PHOTOS Whitewater kayaking already occurs at Wingfield Park in Reno, but plans call for creation of a permanent slalom course. The proposal has won the financial support of two hotel-casinos in town.

Permanent kayaking course among plans By SCOTT SONNER Associated Press The El Dorado Casino, rear center, and Circus Circus are along the Truckee River near Reno. But lawyers for WorldCom and the Securities and Exchange Commission told Rakoff that $500 million is the right amount to punish the company for its historic accounting fraud without driving it out of existence. can second-guess the amount of a settlement and always WorldCom lawyer Paul Curnan said. arbitrary for other entities to come in and say it should be a little more or a lot more, or a little less or NEW YORK WorldCom Inc. and government regulators went before a federal judge yesterday to defend a plan that would fine the bankrupt long-distance giant a record $500 million.

Critics, including WorldCom competitors Verizon and SBC Communications, are urging U.S. District Judge Jed S. Rakoff to reject the settlement and seek a harsher penalty. Rakoff did not rule on the settlement or indicate when he might do so. The settlement ultimately is designed to funnel money to investors harmed by $11billion accounting fraud.

The fine is the largest ever imposed by the SEC on a company, and its approval is a key hurdle for WorldCom to overcome to emerge from Chapter 11 bankruptcy this fall. The SEC and WorldCom said it is important to consider the fine in light of a broad array of reforms WorldCom is adopting. WorldCom also told the judge it plans to submit to an audit by accounting firm KPMG next year, and that an independent, three-person panel will begin issuing quarterly reports on the internal fraud controls. WorldCom critics and competitors have said the fine is too small because collapse wiped out shareholder value that ran as high as $200 billion by some estimates. Hours before the hearing yesterday, labor and other groups protested the settlement on Wall Street.

Rakoff said he was intrigued by a proposal made by some former World- Com shareholders that they be compensated for their huge losses by receiving shares of the new company when WorldCom emerges from bankruptcy. He ordered the SEC and WorldCom lawyers to study the matter and report back to him on whether it would be allowed by law. WorldCom, regulatorsdefend proposed fine of $500 million By ERIN McCLAM Associated Press.