Halliburton Judge Steps Down From Investor Fraud Suit

Aug. 10 (Bloomberg) -- The judge overseeing a shareholder accounting fraud suit against Halliburton Co. stepped down from the case after disclosing that his children owned company stock.

U.S. District Judge David Godbey had been asked to transfer the case to another judge by lawyers representing some investors last week. He told them in a letter that he had discovered ``to my surprise'' that he may be eligible to be a plaintiff in the case because he once held Halliburton stock on behalf of his children.

The case has been assigned to U.S. District Barbara Lynn, according to Sheila Stein, a spokeswoman for the clerk's office of the federal court in Dallas where Godbey sits. ``He has recused himself,'' Stein said in an interview. ``The case has been reassigned.''

The change of judges may delay approval of a proposed $6 million settlement, which was agreed to in May by the company and three of four investors appointed by the judge to manage the suit against Halliburton, the world's largest oil-services firm.

Godbey was scheduled to review the settlement proposal on Aug. 26.

Investors, such as San Diego-based Private Asset Management Fund, allege in their suit that Houston-based Halliburton changed accounting methods without informing investors, overbilled for services and overstated accounts receivable from 1998 to 2002 to boost profit. U.S. Vice President Dick Cheney, who was not sued, was Halliburton Chief Executive Officer until 2000.

The lead investors that support the settlement are Private Asset Management Fund, a San Diego-based mutual fund, Gabriel T. Forrest and Paul J. Benec. The Archdiocese of Milwaukee Supporting Fund Inc., the fourth lead plaintiff, opposes the settlement. Its lawyers asked Godbey to step down.

On Tuesday, the U.S. Securities and Exchange Commission found that Halliburton had secretly changed accounting practices in a manner that boosted profit. The agency fined the company $7.5 million. Investors allege the same secret accounting changes in their suit. Halliburton neither admitted nor denied wrongdoing in agreeing to pay the SEC fine.

Halliburton shares have fallen about 5 percent since Aug. 3 when its SEC filing and settlement were made public. Halliburton shares fell 6 cents to $29.84 at 10:02 a.m. in New York Stock Exchange composite trading.

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