Risk & Compliance

Can’t Pay SEC Penalty? Don’t Bother

The former CFO of Ahold's U.S. subsidiary won't have to fork over almost half a million dollars because of his poor financial condition.
Stephen TaubMay 21, 2008

The Securities and Exchange Commission has settled civil fraud charges against the ex-CFO of Royal Ahold’s one-time U.S. subsidiary relating to the company’s massive accounting scandal.

Michael Resnick, the former finance chief of U.S. Foodservice, consented to the judgment without admitting or denying the allegations in the SEC’s complaint.

He agreed to be permanently barred from serving as an officer or director of a public company. The judgment also assessed against him almost $500,000 in disgorgement and prejudgment interest, but waived the payment based on his financial condition.

The SEC alleged that Resnick and others at USF participated in a scheme to overstate Royal Ahold’s income by at least $700 million in fiscal years 2001 and 2002.

Resnick left the company in 2003 and the following year was criminally charged with conspiracy, securities fraud, and making a false filing with the Securities and Exchange Commission. He was accused of manipulating reserves and making other false entries as a way to meet operating earnings targets.

In September 2006, Resnick pleaded guilty and faced up to five years in prison. However, three months later he was sentenced to six months of home detention and three years’ probation.