The former CFO of Bankrate has been charged with criminal fraud for allegedly manipulating the financial services firm’s books to artificially inflate its stock price and enrich himself and others.
The indictment unsealed Wednesday is the latest chapter in the legal troubles of Edward DiMaria arising from his alleged role in a complex accounting and securities fraud scheme at Bankrate between 2011 and 2014 .
According to the U.S. Department of Justice, he used a combination of methods including “cookie jar” or “cushion” accounting to fraudulently manipulate Bankrate’s publicly reported revenue and earnings, realizing millions of dollars himself by selling his own Bankrate shares at artificially inflated prices.
“The deceptive accounting practices that Edward DiMaria allegedly engaged in can cause real financial harm to investors, along with broader reputational harm to U.S. markets and our country,” Acting Assistant Attorney General John Cronan said in a news release.
In a civil case brought by the Securities and Exchange Commission, DiMaria was ordered in August to pay $231,158 in penalties, disgorgement and interest. Former vice president of finance Hyunjin Lerner, who reported to DiMaria, previously agreed to a settlement of more than $180,000.
The new criminal charges allege DiMaria engaged in “cookie jar” accounting 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 fraudulently increase earnings.
“DiMaria, Lerner, and their co-conspirators kept track of the cookie jar on a spreadsheet they referred to internally as the ‘cushion’ or ‘Ed’s cushion,’” the indictment said.
DiMaria is also accused of making unsupported revenue and earnings adjustments and lying to Bankrate’s auditors and the investing public about the firm’s true financial condition.
DiMaria’s attorneys said he “worked diligently and in good faith at all times to serve the interests of Bankrate and its shareholders” and “looks forward to his day in court to demonstrate that these criminal charges are entirely baseless.”
Former director of accounting Matthew Gamsey and Bankrate itself were fined $60,000 and $15 million, respectively, in the SEC case.