By David Glovin
Bloomberg News
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Mark Kaiser, the former marketing chief of Amsterdam-based Royal Ahold NV’s U.S. unit, was convicted last week of conspiracy and securities fraud for helping lead an $800 million accounting scheme involving promotional rebates at the supermarket owner.
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 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 rebate fraud 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.
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.
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.
Prosecutors, who have said they won’t charge the company, claimed investors lost $6 billion in the fraud. Royal Ahold in 2004 settled civil claims by the U.S. Securities and Exchange Commission without paying a fine, ending a 20-month investigation.
On Nov. 6, Royal Ahold said it would put its U.S. Foodservice unit and Tops grocery stores up for sale and will concentrate on increasing revenue at its Stop & Shop and Giant supermarket chains.
