The former CFO of Bankrate has pleaded guilty to inflating the financial services firm’s earnings in an accounting fraud case that resulted in more than $25 million in shareholder losses.
Edward J. DiMaria allegedly engaged in the complex fraud scheme at Bankrate between 2011 and 2014 to enrich himself and others, realizing millions of dollars for himself by selling his own Bankrate shares at artificially inflated prices.
He pleaded guilty last week to two charges — conspiracy and making materially false statements to the U.S. Securities and Exchange Commission — as part of an agreement with prosecutors that requires him to pay about $21 million in restitution to Bankrate shareholders. His sentencing has been set for Sept. 11.
“Edward DiMaria used his position as Bankrate’s CFO to inflate the company’s earnings and mislead shareholders, auditors, and the SEC, resulting in over $25 million in losses to innocent investors,” Acting Assistant Attorney General John Cronan said in a news release.
“DiMaria’s conviction and the restitution in this case will hopefully provide some solace to Bankrate’s shareholders,” he added.
According to prosecutors, DiMaria admitted manipulating Bankrate’s publicly reported revenue and earnings through “cookie jar” or “cushion” accounting, which involved leaving more than a million dollars in unsupported expense accruals on Bankrate’s books and then selectively reversing the accruals in later quarters to inflate earnings.
As part of his plea agreement, he also admitted that he conspired with other Bankrate employees to misrepresent certain company expenses as “deal costs” to inflate publicly reported adjusted earnings metrics.
The criminal convictions come on top of a civil settlement with the SEC in which DiMaria in August to pay $231,158 in penalties, disgorgement and interest.
Former vice president of finance Hyunjin Lerner, who reported to DiMaria, previously pleaded guilty for his role in the conspiracy and was sentenced earlier this year to 60 months in prison.
“The consequences of this type of financial fraud scheme are far-reaching, affecting not only the economy in the United States, but also the world’s financial markets,” Daniel Adame of the U.S. Postal Inspection Service said.