Wal-Mart and Coughlin settle lawsuit
Posted on Friday, August 22, 2008
Daily Record photograph by David Frank Dempsey Tom Coughlin, right, with his wife, Cynthia Coughlin, and attorney Timothy Brooks, left the Benton County Courthouse after an out-of-court settlement Thursday with Wal-Mart regarding the retailer’s law suit, which threatened to strip away Coughlin’s retirement package worth up to $ 17 million.
BENTONVILLE - It's over !
After a federal prosecution and allegations tossed back and forth in a three-year-old lawsuit, Wal-Mart Stores Inc. and its former vice chairman Tom Coughlin reached a truce Thursday in their legal war.
W. H. Taylor, one of Coughlin's attorneys, announced that the case had been settled about 30 minutes before jury selection was scheduled to begin in the case.
"The case is resolved," Taylor said. "The matter is sealed for 30 days, and then it becomes a public record. "
Although the parties did not disclose the settlement, it was included in documents Wal-Mart filed with the Securities and Exchange Commission. According to the documents, Wal-Mart will pay Coughlin $ 6. 75 million.
Coughlin agreed to forego all outstanding rights and claims under the retirement agreement and other benefit plans, which are estimated at a value of $ 17 million, not including health benefits.
Coughlin and his wife, Cynthia, spent a few hours Thursday morning talking privately with their attorneys in Circuit Judge Jay Finch's courtroom. The couple's daughter was also in the courtroom.
Taylor walked in and out of the courtroom throughout the morning.
Circuit Judge Jay Finch allowed them to use the courtroom as a meeting place.
Occasionally, an attorney for Wal-Mart would pass through the hallway, but neither Wal-Mart attorneys or Coughlin's attorneys would comment on whether they were negotiating a settlement.
Taylor did advise members of the press not to go to lunch because something would happen.
Tim Brooks, another one of Coughlin's attorneys, said the settlement was read into the record, but the parties wanted the settlement to remain sealed for 20 days. Brooks said a confidential settlement could have been reached and the terms of the settlement never disclosed.
Brooks did say the monetary figure is included in the settlement, and the amount was read into the record.
Some of Wal-Mart's attorneys left the Benton County Courthouse after the settlement was announced, but they declined to comment on the settlement.
Prospective jurors were informed of the settlement as they arrived at the courthouse for jury selection, which had been scheduled to begin at 1 p.m.
"We are satisfied that the settlement is fair to both parties, and we are ready to put this one behind us," Daphne Moore, a Wal-Mart representative, said Thursday afternoon.
Wal-Mart filed the suit in 2005 against Coughlin in an attempt to void his retirement agreement that may be valued at up to $ 17 million. Wal-Mart claims Coughlin misappropriated hundreds of thousands of dollars for his personal benefit through fraudulent means.
In January 2006, Coughlin pleaded guilty to five counts of wire fraud and one count of tax evasion. Criminal information charged that Coughlin used his position at Wal-Mart from 1996 to 2002 to execute a scheme to illegally instruct subordinate employees to manipulate the employee travelreimbursement and vendorinvoice accounting systems at Wal-Mart to embezzle money, gift cards and products that were provided to Coughlin for his personal benefit.
U. S. District Judge Robert Dawson sentenced Coughlin to five years' probation, with 27 of the months on home detention, and 1, 500 hours of community service. He was ordered to pay a $ 50, 000 fine, $ 306, 822. 40 in restitution to Wal-Mart and $ 104, 395. 60 to the Internal Revenue Service.
Brooks said settlement dialogue been the parties had been going on for a long time, but nothing actually began in earnest until recently.
"The Coughlins are satisfied with the settlement," Brooks said.
Brooks said Coughlin was excited about going to trial but is satisfied with the settlement and the finality it brings between him and Wal-Mart.
Coughlin retired in January 2005 after 27 years with Wal-Mart. Wal-Mart announced in June 2005 that it was rescinding Coughlin's retirement agreement.
Coughlin's legal issues are not over. Two of his Wal-Mart subordinates - Robert Hey and Patsy Stephens - have filed lawsuits against Coughlin in connection with their roles in defrauding Wal-Mart.
Stephens, a former administrative manager for Wal-Mart, claims in her lawsuit that she was unaware that the actions Coughlin and her supervisor Rob Hey asked of her were illegal. Stephens was found guilty of eight counts of wire fraud in federal court, and she was placed on probation for two years and ordered to pay a $ 1, 000 fine.
Hey also filed a lawsuit against Coughlin. Hey pleaded guilty to five counts of wire fraud and one count of filing a false income-tax return. He admitted to helping Coughlin steal money from Wal-Mart and was sentenced to six months of supervised release and ordered to pay a $ 3, 000 fine.
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