NextCard duns former CEO to repay loan
The company, which formerly issued credit cards over the Internet, demands that departed Chief Executive John Hashman pay back a $120,000 personal loan.
NextCard notified Hashman of his obligation last month, the company said in a document filed with the Securities and Exchange Commission on Tuesday. As of Tuesday, Hashman still hadn't repaid the loan, which, with interest, now amounts to $132,500, the company said.
The company, which formerly issued credit cards over the Internet, announced last month that it was being investigated by the SEC. The company did not say why it was being investigated.
Bob Linderman, NextCard's general counsel, declined to comment on Hashman's loan, except to say that he didn't think it was connected to the SEC's investigation.
"I have no knowledge of what the SEC is investigating, but to the best of our knowledge, it's not related," he said.
The SEC would not confirm or deny whether it is investigating NextCard, commission spokesman John Heine said.
Once a high-flying Internet company backed by Amazon.com, NextCard has fallen on tough times in the year gone by. Last fall, amid wider-than-anticipated losses, the company announced that it was seeking a buyer. After it failed to find one, federal regulators in February shut down the company's NextBank subsidiary, which issued its credit cards. Federal regulators later deactivated some 800,000 NextCard credit cards after it couldn't find anyone to purchase the accounts from NextBank.
Hashman left NextCard last month. On Aug. 31, he gave the company's board 30 days notice of his intent to resign, according to the company's SEC filings. But instead of letting him stay the full 30 days, the board accepted his resignation on Sept. 3, the company said.
Hashman was not immediately available for comment.
NextCard loaned Hashman the money in 2000 for "tax and brokerage loan expenses and other reasons," according to documents filed with the SEC. The loan carried an interest rate of 8 percent simple interest and was due immediately after Hashman left the company, according to the filings.
Such personal loans to executives have become increasingly controversial in the past year with the corporate scandals involving Tyco International, Enron, WorldCom and other companies. The Sarbanes-Oxley Act of 2002 banned new personal loans to executives and board members of public companies, but does not affect existing loans.