Originally published September 14 2005
Two former K-Mart executives charged with financial fraud
by Mike Adams, the Health Ranger, NaturalNews Editor
Charles Conaway, Kmart's former chief executive, and John McDonald, the former chief financial officer, were both charged with false and misleading disclosure about Kmart's liquidity by the Securities and Exchange Commission, Market Watch reports.
The Securities and Exchange Commission said Charles Conaway, the retailer's former chief executive, and John McDonald, former chief financial officer, are both responsible for false and misleading disclosure about Kmart's liquidity in the company's financial statement for the third quarter and nine months ended Oct. 31, 2001.
The federal charges come a week after a three-member arbitration panel in Michigan cleared Conaway of alleged fraud, mismanagement and corporate looting.
In a Kmart regulatory filing, Conaway and McDonald didn't disclose the reasons for massive overbuying of inventories in the summer of 2001 and the impact it had on the company's liquidity, the SEC said.
The overbuying reflected a Kmart officer's "reckless and unilateral" purchase of $850 million of excess inventory, the SEC said.
The agency, along with seeking fines against both former Kmart officers, will attempt to have both of them banned from serving as officers or directors of public companies.
Kmart emerged from bankruptcy in May 2003 as Kmart Holding Corp., a much smaller retailer.
Earlier this year, Sears Holdings Corp. (SHLD: news, chart, profile) was created after Kmart acquired venerable retailer Sears Roebuck & Co.
Shares of Sears Holding were recently trading up 56 cents to $137.17.
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