Former United Rentals President and CFO Admits Conspiring to Falsify Company Books

Nora R. Dannehy, United States Attorney for the District of Connecticut, and Kimberly K. Mertz, Special Agent in Charge of the Federal Bureau of Investigation, announced that JOHN N. MILNE, 50, of Westport, Connecticut, pleaded guilty today before Senior United States District Judge Ellen Bree Burns in New Haven to one count of conspiracy to falsify the books and records of United Rentals, Inc. while he served as its Chief Financial Officer.

According to court documents and statements made in court, from December 2002 through his termination in August 2005, MILNE served as the President and Chief Financial Officer of United Rentals, Inc. and its wholly owned subsidiary, United Rentals (North America), Inc. (collectively, “URI”). In pleading guilty, MILNE admitted that, in 2003, he and others conspired to falsify URI’s books and records, including recording falsely inflated gains, with respect to the nature of certain payments made to settle obligations incurred as a result of minor sale leaseback (“MSLB”) transactions entered into by URI. Specifically, on approximately December 31, 2002, MILNE executed a contract on behalf of URI with Terex Corporation (“Terex”) relating to URI’s obligations under a remarketing agreement that URI had with Terex. In the contract, URI agreed to make a payment to Terex to cover losses incurred by Terex in connection with one of the MSLBs. In January 2003, URI wired a payment of $8,777,172 to Terex. In March 2003, URI paid Terex $4,030,328 to reconcile amounts owed to Terex on an MSLB with another manufacturer that Terex had acquired. The check requisition for this second payment falsely noted that the payment was for the purchase of equipment.

“This case demonstrates that corporate executives who engage in wrongdoing will be held accountable,” stated U.S. Attorney Dannehy. “Federal law enforcement is committed to investigating and prosecuting those who falsify company financial information in order to mislead the investing public.”

Judge Burns has scheduled sentencing for February 11, 2010, at which time MILNE faces a maximum term of imprisonment of five years and a fine of up to $250,000. As part of a plea agreement, the Government and the defendant have recommended that the Court sentence MILNE to 27 months of imprisonment.

“This guilty plea should serve as a warning to other corporate executives that the FBI is vigilant and is working with our federal partners to protect the integrity of our financial markets from manipulative business practices,” stated FBI Special Agent in Charge Mertz.

In order to resolve a separate civil action brought by the United States Securities and Exchange Commission, (Securities and Exchange Commission v. John N. Milne, 3:08CV505), MILNE has agreed to disgorge $6.25 million.

This matter was investigated by the Federal Bureau of Investigation with the cooperation and assistance of the Securities and Exchange Commission. The case is being prosecuted by Assistant United States Attorneys Paul A. Murphy and Michael S. McGarry of the United States Attorney’s Office Securities and Investor Fraud Unit.

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