The Securities and Exchange Commission settled a civil fraud action against a former executive of Royal Ahold’s then-U.S. unit stemming from the company’s massive accounting fraud earlier this decade.

Brian Spears, a former vice president of purchasing at U.S. Foodservice, then a subsidiary of Dutch food conglomerate Royal Ahold, agreed to settle without admitting to or denying the allegations in the complaint. Spears was fired in 2003.

He agreed to disgorge $45,000 and pay prejudgment interest of $15,547. The SEC waived payment and did not impose a civil penalty, however, citing sworn representations in Spears’ statement of financial condition and other documents submitted to the commission. Spears also was barred from serving as an officer or director of a public company for five years.

The complaint alleged that Spears and others at U.S. Foodservice engaged in a large-scale fraud that, for fiscal years 2001 and 2002, materially overstated operating income by about $700 million. The complaint also alleges that Spears and others at the company induced third parties to confirm false information to its outside auditors. The SEC said Spears and others did this to make it falsely appear that amounts recorded on U.S. Foodservice’s books and records as accounts receivable were earned.

Spears called vendors at the company’s 2001 fiscal year-end and 2002 fiscal year-end and worked with others there to convince the vendors to sign the confirmation letters and return them to the company’s auditors, according to the complaint.

The SEC has brought actions against more than a dozen individuals stemming from the fraud at the Ahold unit. They include U.S. Foodservice chief financial officer Michael Resnick as well as at least nine individuals who worked for vendors, alleging they aided and abetted the same financial fraud by signing and returning materially false audit confirmations.

In late 2006, Resnick was sentenced to six months home detention and three years’ probation after pleading guilty of criminal charges, thus avoiding prison time. He was accused of manipulating reserves and making other false entries as a way to meet operating earnings targets for U.S. Foodservice.

In September 2006, Ahold signed a non-prosecution agreement with provisions that it would not be prosecuted for the accounting fraud or a related SEC civil suit. In addition, Ahold would not be prosecuted for making false statements to the U.S. Defense Department, or any other U.S. agency, related to the pricing of goods sold between 2000 and the present.

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