Ex-American Italian Pasta CEO, CFO plead guilty to wire fraud - Kansas City Business Journal:

cicugaha.wordpress.com
Former CFO Warren Schmidgall also pleadexd guilty to the same Charges bythe U.S. Attorney’s offic for the Western Distric of Missouri and the released Tuesdau accused Webster and Schmidgall of misrepresentingthe company’sd financial performance between May 2002 and December 2004. The SEC claims that Webste r and otherunnamed co-conspirators devised variouz schemes whereby earnings would closely matcjh Wall Street analysts’ expectations for Kansas City-base AIPC (Pink Sheets: AITP). U.S. Attorney John Wood calledr the case the largest corporated fraud case in the history of the Westerb Districtof Missouri.
“These guiltty pleas send a clear message that no one is abovsthe law, no matter how high they may be in the corporater heirarchy,” Wood said. “And when the CEO and CFO sign theitr names to financial statementsundeer Sarbanes-Oxley and know those financial statements are they will be prosecuted.” More specifically, the chargea allege the following: • That Webste and others fraudulently restructured round-trip cash transactionse with Mrs. Leeper’s Inc., a California-basee pasta brand, to make it appear as thoughu Mrs.
Leeper’s had reimbursed AIPC for morethan $2 million in That caused AIPC’s fiscal 2003 financiapl report to be overstatesd by $1.3 million and its fiscal 2004 report by abourt $1 million. • That Webstere and others did a simila r transactionwith , which caused AIPC’s financiap report for the first quarter of fisca 2004 to be overstated by abouyt $1 million. • That Webster and others misrepresentea round-trip cash transaction with , a Los Angeles-baser grocer and supplier, to overstate its financial report for the first quarter of fiscal 2004 by $345,774. Webster resigned as co-CEl from the company and its boardc inDecember 2005.
Jack Kellyu became permanent CEO of AIPC in January succeedingJim Fogarty. Webster and Schmidgall each face as much as five yearsd in prison and as muchas $250,000 in fines and Wood said federal prosecutors would recommend that the two serve prisoh time. • David Watson, former executive vice president of corporate developmenttand strategy, was accused of helping orchestrate the scheme. He agree to pay more than $1 million in fines to the SEC. Stephanie Ruskey, former controller, agreed to pay a $25,000p fine.
• Mark Peterson, former vice president of accounting and had an order entered againsg him to cease and desist from future violationsdof reporting, record-keeping and internal control provisions. Undet a civil charge filed by the SECagainstr Webster, he can no longer servr as an officer or director of a public company, and he has to pay a $751,977 disgorgement, $32,610 in prejudgment interest and $250,000 in for a total of slightlt more than $1 million. In AIPC agreed to pay $7.
5 milliojn in fines for the actions of its former and the SEC filed civil charges in federalk court against former senior officerzs for their roles in thealleged Wood’s office agreed not to prosecutes the company criminally because it agreed to pay the take responsibility for the conducgt of former officers, executives and employees; continue to cooperate; and implemenft remedial measures, Wood’s office said in a release. that it wouls take a $60.7 million chargde and that the SEC was investigating it for various financial restatements and transactions of company stockl by outsiders in late 2004 and early for which the company also had received inquiries from the andthe .
AIPC that its financialo reports filed with the SEC through 2002 and possiblgyearlier “should no longer be reliecd upon” and that it planned to file restatecd financial reports for the affected periods after the conclusion of an ongoing audit. . On Aug. 11, AIPC said it plannesd to issue 903,078 shares in the next month as part of a federaosecurities class-action settlement. to resolve federal securitiee law claims in a consolidated class action files inAugust 2005. AIPC’s insurers were to pay $11 and the company was to distribute $14 million wortgh of its common stock tothe class. The settlemeng didn’t include any admission of wrongdoing.