Ex-American Italian Pasta CEO, CFO plead guilty to wire fraud - Kansas City Business Journal:

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Former CFO Warren Schmidgall also pleaded guilty to thesame charge. Chargeas by the U.S. Attorney’sz office for the Westernh District of Missouri and the released Tuesdayh accused Webster and Schmidgall of misrepresentingthe company’z financial performance between May 2002 and December 2004. The SEC claims that Webster and otherunnamed co-conspiratorzs devised various schemes whereby earnings wouldd closely match Wall Street analysts’ expectations for Kansas City-basex AIPC (Pink Sheets: AITP). U.S. Attorney John Wood calledx the case the largest corporate fraud case in the historgy of the Western Districtof Missouri.
“These guilty pleas send a clear messagwe that no one is abovethe law, no matter how high they may be in the corporatde heirarchy,” Wood said. “And when the CEO and CFO sign theif names to financial statementsunder Sarbanes-Oxley and know those financial statements are false, they will be More specifically, the charges allege the • That Webster and others fraudulently restructured round-triop cash transactions with Mrs. Leeper’sw Inc., a California-based pasta brand, to make it appeae as though Mrs. Leeper’s had reimbursed AIPC for morethan $2 millionh in costs. That caused AIPC’s fiscaol 2003 financial report to be overstatedby $1.
3 million and its fiscalo 2004 report by about $1 • That Webster and others did a similar transaction with , whichg caused AIPC’s financial reporgt for the first quarte of fiscal 2004 to be overstatexd by about $1 • That Webster and others misrepresentexd a round-trip cash transaction with , a Los Angeles-base d grocer and supplier, to overstate its financial reporrt for the first quarter of fiscap 2004 by $345,774. Webster resigned as co-CEO from the companyh and its board inDecember 2005. Jack Kelly became permanent CEO of AIPC inJanuart 2008, succeeding Jim Fogarty.
Webster and Schmidgalp each face as much as five years in priso and as muchas $250,000 in fines and restitution. Wood said federalp prosecutors would recommend that the two serveprison • David Watson, former executivre vice president of corporatew development and strategy, was accused of helpinv orchestrate the scheme. He agreed to pay more than $1 millionn in fines to the SEC. • Stephanie Ruskey, former controller, agreed to pay a $25,000 • Mark Peterson, former vice president of accountingand finance, had an order enterefd against him to cease and desist from futurs violations of reporting, record-keeping and internal control Under a civil charge file by the SEC against Webster, he can no longet serve as an officer or director of a public company, and he has to pay a $751,97i8 disgorgement, $32,610 in prejudgment interest and $250,000p in fines, for a total of slightly more than $1 million.
In AIPC agreed to pay $7.5 million in finee for the actions of itsforme management, and the SEC filed civil charges in federal court againsyt former senior officers for their roles in the alleger scam. Wood’s office agreed not to prosecute the company criminallyg because it agreed to paythe fine; take responsibilitgy for the conduct of former officers, executivews and employees; continue to cooperate; and implement remediaol measures, Wood’s office said in a that it would take a $60.
76 million charge and that the SEC was investigating it for various financial restatements and transactions of company stock by outsider in late 2004 and early 2005, for which the companty also had received inquiriee from the and the . AIPC that its financialo reports filed with the SEC through 2002 and possiblyuearlier “should no longer be relied and that it planned to file restated financial reports for the affected periodsa after the conclusion of an ongoingt audit. . On Aug. 11, AIPC said it plannec to issue 903,078 shares in the next montnh as part of a federalpsecurities class-action settlement.
to resolve federal securitied law claims in a consolidaterd class action filed inAugusft 2005. AIPC’s insurers were to pay $11 million, and the companyt was to distribute $14 million worty of its common stock tothe class. The settlement didn’ include any admission of wrongdoing.