Paul Humphreys, the former CFO of Safety-Kleen, surrendered to FBI agents and pleaded guilty in federal court on Friday to securities and bank fraud charges stemming from a scheme to overstate earnings from 1998 through 2000, according to Michael Garcia, the U.S. Attorney for the Southern District of New York.

Indicted in December 2002, Humphreys faces up to 45 years in prison and $2.25 million in fines. The fraud was part of an attempt to meet earnings targets the company had predicted at the time Safety-Kleen was acquired by Rollins Environmental Services in 1998.

When Rollins acquired the hazardous-waste-disposal company, executives of the merged company predicted to investors that within one year of the merger, the company would record combined annual earnings of about $500 million because of “synergies” and cost savings, according to the indictment. After the merger, however, the company fell short of those targets.

In an attempt to show the company was garnering the predicted earnings, Humphreys and others took part in an illegal scheme to falsify Safety-Kleen’s general ledger and its financials, according to Garcia. They artificially inflated the earnings disclosed by Safety-Kleen in its annual reports, quarterly reports, press releases, and conference calls, the indictment says.

“Humphreys systematically made and directed other Safety-Kleen employees to make a series of false accounting entries, commonly known as ‘top side’ adjustments, to artificially inflate earnings for the quarter,” the indictment adds. “These adjustments made Safety-Kleen’s financial statements false and misleading in a number of material respects.” Humphreys is scheduled to be sentenced on October 19.

About 8 to 10 business days after the close of each quarter, senior management held operations conference calls with representatives of various field offices to talk about the quarterly results and compare them with budgeted and prior-year results, according to Garcia’s announcement.

The federal prosecutors charged that Humphreys met with “one or more co-conspirators,” informed them of a higher “target” earnings number that he wanted the company to publicly report, and discussed “corporate adjustments” they would make to inflate the reported earnings to match the target earnings.

Humphreys and his co-conspirators then made “adjustments” to the company’s general ledger to boost reported revenues and decrease expenses, the indictment further charges. It adds that Humphreys and the others knew that many of those “adjustments” were not supported by the facts, were without proper documentation, and/or were improper under GAAP.

The indictment identifies two co-conspirators that were not named as defendants: William Ridings, a vice president and the controller of Safety-Kleen and its predecessor entities, and Thomas Ritter, vice president of accounting of Safety-Kleen and its predecessors. From December 1999 to March 2000, Ritter was Safety-Kleen’s vice president of business analysis and integration.

In December 2002, Ridings pleaded guilty to securities fraud and implicated Humphreys, according to reports published at the time. Ritter could not be located at press time.