Risk Management

Former Ahold Exec May Face Life in Jail

The conviction of Mark Kaiser, the former marketing chief of Royal Ahold's U.S. unit, could spawn one of the stiffest sentences in a period of nota...
Stephen TaubNovember 9, 2006

Mark Kaiser, the former marketing chief of Royal Ahold NV’s U.S. unit, was convicted of conspiracy, securities fraud, and four counts of making false financial filings after a four-week trial in New York federal court, according to Bloomberg.

The conviction could spawn one of the stiffest sentences in a period of notably lengthy punishments for white-collar crime. Kaiser, 49, could potentially spend the rest of his life in prison. According to Bloomberg, the securities fraud count carries a 20-year maximum sentence, conspiracy has a five-year maximum, and the false filing counts each carry a 10-year maximum sentence.

Kaiser, who remains free on bail until his sentencing on Feb. 8, was accused of helping to lead an $800 million accounting fraud involving promotional rebates at Columbia, Md.-based U.S. Foodservice, according to several reports. Bloomberg reported that Kaiser allegedly helped the supermarket owner overstate earnings from 2000 to 2003 by recording as income promotional rebates that the company hadn’t yet earned. As a result, Kaiser reportedly was able to earn a larger bonus.

Kaiser was reportedly the last of more than 15 people to face charges in the case, in which Ahold admitted in 2003 that it overstated earnings by $1.22 billion. Last year, the company agreed to pay $1.1 billion to settle a class-action shareholder lawsuit in a U.S. court stemming from the accounting scandal.

In late September, Michael Garcia, U.S. Attorney for the Southern District of New York, said Ahold would not face criminal prosecution for the accounting scandal at US Foodservice.

Earlier this week, Ahold said it put U.S. Foodservice and its Tops retail stores up for sale in order to cut costs and improve profitability.