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Finance Exec Goes Through the Mill (Updated)

After the restatements are completed and the company is acquired, the chief accounting officer joins the CEO and CFO in leaving.
Stephen TaubMay 1, 2007

Clarification:
This story has been updated to reflect the fact that the departing executives were brought to The Mills Corp. to help correct previous problems.

With the restatements completed at The Mills Corp., and a buyer having been found, another finance executive is leaving Mills.

The real estate investment trust, recently acquired by Simon Property Group and funds managed by Farallon Capital Management, announced that the employment of senior vice president and chief accounting officer David A. Schneeman “will cease,” effective May 4.

Schneeman was one of several finance employees brought in to Mills in 2006 as part of what the company called “a near-complete change of senior management personnel.” Previously, Mills had been plagued with problems that resulted in restatements for 2001 through 2004 and the first three quarters of 2005 to correct accounting errors, with a possible impact on shareholders’ equity of $352 million.

Others brought in to help repair the problems included president and CEO Mark Ordan and executive vice president and CFO Richard Nadeau. A few weeks agao, Mills also announced that Ordan and Nadeau would be leaving, effective May 8.

Schneeman is eligible to receive severance and other benefits totaling $473,000 plus a pro-rated bonus of approximately $30,000.

Mills stated earlier this year that its audit committee, advised by independent counsel and a forensic accounting firm, had identified a number of instances in which company personnel “failed to recognize the implications under GAAP of particular transactions, events, or other facts.” The company’s rapid growth and complex financial structure reportedly exacerbated the number of errors.

Mills also conceded that in a number of instances, “the company’s overall culture and ‘tone at the top’ were heavily focused on meeting external and internal financial expectations.” In addition, the company acknowledged that certain errors reflect “a lack of competence and in some instances a failure of communication and inadequate internal controls.”

A relatively small number of errors, Mills also stated, were “caused by possible misconduct by former accounting and asset management personnel,” including, in at least one instance, through management override.