Former Kmart executives on fraud charges
SEC investigates alleged security fraud
February 27 2002
Two former Kmart executives have been indicted by the US attorney’s office in Detroit.
Enio Montini, former vice-president and general merchandise manager of the drug store division, and Joseph Hofmeister, a divisional vice-president in the same division, are charged with securities fraud, as well as conspiracy and making false statements to the securities and exchange commission.
Discounter Kmart filed for bankruptcy at the beginning of 2002 after a long struggle to stay solvent. Montini and Hofmeister were among a group of executives made redundant in May 2002.
The allegation relate to a $42m multi-year payment from one of the company’s customers, which it is alleged was accounted for entirely in one quarter to make the division appear more profitable than it was.
Earlier this week, the company demanded that former chief executive Charles Conaway return $9m paid as a loan and severance package. Kmart has said that Conaway misled directors over the state of the company’s finances.
Coming in the wake of a series of corporate scandals, as well as the announcement that Ahold’s US business is under investigation, the charges will be a further blow to US confidence in the business sector.
