Four former employees of Kmart Corp. and Newell Rubbermaid Inc. have agreed to settle civil charges brought by the Securities and Exchange Commission, according to the Associated Press.
Reportedly, the alleged misconduct — improperly accounting for payments from Rubbermaid to Kmart — inflated the retailer’s net income for the fourth quarter and fiscal year ended January 31, 2001, by approximately $4.8 million.
Former Kmart vice president David Levine reportedly agreed to pay a $35,000 penalty; Michael Spake, a former buyer in the company’s home-storage division, was spared a penalty because he “demonstrated inability to pay,” reported the AP, citing an SEC official. Douglas Ely, formerly national manager of Rubbermaid’s Kmart account, agreed to pay $25,000; Barry Berlin, former director of sales for Rubbermaid’s Kmart division, agreed to pay $30,000. All four individuals agreed to refrain from future violations of federal securities laws.
Last week, the commission charged former Kmart chief executive officer Charles Conaway and former chief financial officer John McDonald with misleading investors about Kmart’s financial condition in the months preceding the retailer’s bankruptcy filing in January 2002.
As part of its probe into the retailer’s accounting scandal, last December the SEC filed civil fraud charges against three other former Kmart executives, as well as five current and former employees of Eastman Kodak Co., Coca Cola Enterprises Inc., PepsiCo Inc.’s Frito-Lay division. Five of the eight individuals reportedly settled, for a total of $160,000.