A former chief executive officer who used “cookie jar” reserves to improve the appearance of his company’s performance has been sentenced to ten years in prison.
John Brincat headed Mercury Finance, a subprime car-loan company whose 1997 restatement precipitated a $2 billion drop in the value of its stock and the company’s eventual collapse. Brincat pleaded guilty last November to wire fraud and lying to a bank, reported the Associated Press.
In addition to his ten-year sentence, the 70-year-old Brincat was ordered by U.S. District Judge Rebecca R. Pallmeyer to undergo treatment for alcohol and gambling problems, according to the AP. Judge Pallmeyer reportedly assessed no fine so any recovery from Brincat could be used toward restitution of investors.
The AP added that former treasurer Bradley Vallem was sentenced to 20 months in prison after pleading guilty to wire fraud and making false statements to a financial institution, while former accountant Lawrence Borowiak was sentenced to a year and a day after pleading guilty to insider trading in Mercury stock.
The wire service also noted that three other Mercury executives, including chief financial officer James Doyle, were involved in the company’s collapse. Doyle, who died in 1997 while cooperating with federal prosecutors, was never charged with a crime, the AP added.
Mercury — which as late as January 1997 was a prospect for investment by BankBoston — was delisted from the New York Stock Exchange in May 1998. After filing for bankruptcy about two months later, it was reorganized into MFN Financial, which was acquired by Consumer Portfolio Services in 2002.