By David Glovin, Bloomberg News
Mark Kaiser, the former marketing chief of Royal Ahold NV’s U.S. unit, was convicted Wednesday of conspiracy and securities fraud for helping lead an $800 million accounting scheme involving promotional rebates at the supermarket owner.
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A jury returned the guilty verdict Wednesday after a four-week trial in New York federal court. Prosecutors said Kaiser helped Columbia, Md.-based U.S. Foodservice overstate earnings from 2000 to 2003 by recording as income promotional rebates that the company hadn’t yet earned. The fraud helped Kaiser win a bigger bonus, prosecutors said.
Convicted of conspiracy, securities fraud and four counts of making false financial filings, Kaiser was the last of more than 15 people to face charges in the case. Ahold, owner of Stop & Shop Stores in the United States, admitted in 2003 that it overstated profit by 970 million euros ($1.22 billion), mostly related to fraud involving rebates at U.S. Foodservice.
Kaiser and his lawyers declined to comment after the verdict. “We’ll do all our talking in the court of appeals,” defense attorney Richard Morvillo said, referring to a possible appeal to the U.S. Court of Appeals in Manhattan.
The securities fraud count carries a 20-year maximum sentence, conspiracy has a five-year maximum, and the false filing counts each carry a 10-year maximum sentence. Kaiser, who remains free on bail, will be sentenced Feb. 8.
Prosecutors, who have said they won’t charge the company, claimed investors lost $6 billion in the fraud. The Amsterdam- based company in 2004 settled civil claims by the U.S. Securities and Exchange Commission without paying a fine, ending a 20-month investigation.
Michael Resnick, the former U.S. Foodservice finance chief, pleaded guilty to conspiracy in September. The company’s former purchasing chief, Timothy Lee, and another senior purchasing executive, William Carter, also pleaded guilty, as have more than a dozen food vendors who admitted they helped U.S. Foodservice falsify records by submitting false verifications of purchase orders.
Lee testified against Kaiser at the trial. Kaiser’s lawyers claimed Lee falsely accused Kaiser of helping lead the fraud as a way to win leniency from prosecutors.
Royal Ahold had announced on Monday that it plans to put its U.S. Foodservice unit and Tops grocery stores up for sale and to concentrate on increasing revenue at its Stop & Shop and Giant supermarket chains.
