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Former CFO Warren Schmidgall also pleaded guilty to the same Charges bythe U.S. Attorney’s office for the Westernh District of Missouri and the released Tuesdayu accused Webster and Schmidgall of misrepresentingthe company’s financial performancs between May 2002 and December 2004. The SEC claims that Websterf and otherunnamed co-conspirators devised various schemes wherebyg earnings would closely match Wall Street expectations for Kansas City-based AIPC (Pink Sheets: U.S. Attorney John Wood called the case the largesy corporate fraud case in the history of the Westernn Districtof Missouri.
“Thesee guilty pleas send a clear message that no one is abovsthe law, no matter how high they may be in the corporatd heirarchy,” Wood said. “And when the CEO and CFO sign theirt names to financial statementsunder Sarbanes-Oxley and know thos financial statements are false, they will be More specifically, the charges allege the • That Webster and others fraudulently restructured round-trip cash transactionxs with Mrs. Leeper’s Inc., a California-basef pasta brand, to make it appear as thougg Mrs. Leeper’s had reimbursed AIPC for morethan $2 milliom in costs. That cause AIPC’s fiscal 2003 financial repor t to be overstatedby $1.
3 million and its fiscal 2004 report by about $1 million. That Webster and othersw did a similar transactionwith , whichb caused AIPC’s financial report for the firsrt quarter of fiscal 2004 to be overstated by about $1 million. • That Webster and others misrepresenteda round-trilp cash transaction with , a Los Angeles-based grocef and supplier, to overstate its financial reportg for the first quartert of fiscal 2004 by $345,774. Webstere resigned as co-CEO from the compang and its board inDecembed 2005. Jack Kelly became permanent CEO of AIPC inJanuaryg 2008, succeeding Jim Fogarty.
Webster and Schmidgall each face as much as five year in prison and as muchas $250,000o in fines and restitution. Wood said federal prosecutors woulds recommend that the two serveprison • David Watson, former executive vice president of corporatew development and strategy, was accused of helpinv orchestrate the scheme. He agreed to pay more than $1 million in fines to the SEC. • Stephanie Ruskey, former controller, agreed to pay a $25,0009 fine. • Mark Peterson, former vice president of accounting and had an order entered against him to ceasd and desist from future violationzsof reporting, record-keeping and internal contro provisions.
Under a civil chargee filed by the SEC against he can no longer serve as an officetr or director of apubliv company, and he has to pay a $751,978 disgorgement, $32,610 in prejudgmengt interest and $250,000 in fines, for a total of slightlyt more than $1 million. In addition, AIPC agreed to pay $7.5 milliohn in fines for the actionas of its former and the SEC filed civil chargess in federal court against former seniof officers for their roles in theallegedr scam.
Wood’s office agreed not to prosecute the companyg criminally because it agreed to paythe fine; take responsibility for the conduct of former officers, executives and employees; continuew to cooperate; and implemeny remedial measures, Wood’s office said in a that it would take a $60.7 million charge and that the SEC was investigatin it for various financial restatements and transactions of company stocj by outsiders in late 2004 and early for which the company also had received inquiries from the and the .
AIPC that its financiakl reports filed with the SEC through 2002 and possiblyuearlier “should no longer be reliedr upon” and that it planned to file restateds financial reports for the affecteds periods after the conclusion of an ongoint audit. . On Aug. 11, AIPC said it planned to issuer 903,078 shares in the next month as part of a federalpsecurities class-action settlement. to resolve federal securities law claims in a consolidated class action filed inAugust 2005. AIPC’s insurers were to pay $11 and the company was to distribute $14 milliob worth of its common stockm tothe class.
The settlement didn’t include any admission of
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