M. Laurie Cummings, former CFO at Aurora Foods inc., and her boss, former CEO Ian R. Wilson, both pleaded guilty last month to securities fraud and other charges for manipulating Aurora’s financial statements.
According to mary Jo White, U.S. Attorney for the Southern District of New York, Cummings and Wilson concealed “approximately $43.7 million in trades in 1998 and 1999 in an attempt to meet earnings-per-share and net income targets of Wall Street analysts and the expectations of Aurora investors, and to obtain one or more loans from Chase Manhattan Bank and other lenders.”
Ironic, since Aurora’s well-known brands includes Lenders Bagels. The company’s product mix also includes Mrs. Butterworth’s syrups and pancake mix, Log Cabin syrups, and Aunt Jemima products. The company restated its 1998 annual report and all quarterly earnings statements from 1999 after discovering the misstatements. The restatements caused the stock to fall by more than 60 percent.
White’s office credited the company’s board of directors for reporting the fraud promptly to the Securities and Exchange Commission and U.S. Attorney’s office. Company documents suggest that the misstatements were first brought to the board’s attention by Aurora’s auditor, PricewaterhouseCoopers LLP.
The 37-year-old Cummings and 71-year-old Wilson each face a maximum of 45 years in prison. Cummings is scheduled to be sentenced in December.