Friedman’s CFO Abruptly Resigns

Richard Cartoon is the second finance chief to depart the jeweler in the past five months.
Stephen TaubMay 6, 2004

Jewelry retailer Friedman’s Inc., which is being investigated by the Securities and Exchange Commission, said Richard Cartoon has resigned as chief financial officer and treasurer, effective immediately. He had been on the job just five months.

The company did not provide any reason for Cartoon’s abrupt departure.

In November, the SEC launched a formal investigation of the company related to a lawsuit filed by Capital Factors Inc., against Cosmopolitan Gem Corp. (a former vendor of Friedman’s) and a number of other defendants, including Friedman’s, Crescent Jewelers and Whitehall Jewelers.

Friedman’s also said it would restate its results back to at least fiscal 2000 based on concerns related to its accounting of bad debt and losses. In addition, the company’s auditor, Ernst & Young, withdrew its audit opinions on previously filed annual financial statements.

When the SEC began its formal investigation and Friedman’s announced its restatement, the company announced that it had placed chief financial officer Victor Suglia on leave. In December, Suglia and chief executive officer Bradley Stinn resigned, and Cartoon joined the company. In March, Friedman’s said it received a Wells notice from the SEC indicating that the regulatory agency is considering a civil enforcement action.

In a separate announcement, the company also said that its Class B common shareholders executed a “consent to corporate action,” which resulted in the removal of director John Cay III and the addition of five new directors: Alan Stanzler, Thaddeus Jaroszewicz, Joseph McSweeney, Peggy Brockschmidt, and Allan Edwards.