The former CFO of Bankrate has been sentenced to 10 years in prison for orchestrating an accounting fraud at the financial services firm that resulted in more than $25 million in shareholder losses.
Edward J. DiMaria, 53, was also ordered to pay restitution of $21.2 million at his sentencing Tuesday in Florida federal court. He had pleaded guilty in June to fraud charges related to a complex scheme at Bankrate between 2011 and 2014 that involved inflating the firm’s earnings through “cookie jar” or “cushion” accounting.
Prosecutors alleged DiMaria participated in the scheme to enrich himself and others, realizing millions of dollars for himself by selling his own Bankrate shares at artificially inflated prices.
In a bid for leniency, DiMaria argued that the fraud amounted to only an “incremental smoothing of earnings” far less egregious than the accounting manipulation cases that took down Enron and Worldcom.
“It cannot be said that Bankrate’s business was vastly different than its reported results,” DiMaria’s attorneys wrote in a letter to the judge. “Relatedly, the disclosure of the fraud did not put the company out of business or in financial distress.”
But the government countered that the swindle cost Bankrate shareholders more than $25 million.
“While serving as Bankrate’s CFO, Edward DiMaria blatantly manipulated the company’s publicly reported financial statements by repeatedly lying and directing others to lie to auditors, regulators, and shareholders,” Assistant Attorney General Brian Benczkowski said in a news release.
“The significant sentence handed down today underscores the serious nature of corporate fraud and the damage it causes to shareholders and to the public’s trust in our financial markets,” he added.
According to prosecutors, DiMaria manipulated Bankrate’s publicly reported revenue and earnings by 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 conspiring to misrepresent certain company expenses as “deal costs” to inflate publicly reported adjusted earnings metrics.
Former Bankrate vice president of finance Hyunjin Lerner, who reported to DiMaria, was sentenced earlier this year to 60 months in prison for his role in the fraud.