Mon September 15, 2008
Call It A Mini-Enron: Record-Setting Case Snares Pasta Maker
Kansas City, Mo. – It is the biggest white collar crime of it's kind in western Missouri- federal court history. Two former executives of the nation's largest pasta maker are charged with, and plead guilty to, bilking investors of untold millions.
Kansas City based American Italian Pasta company took on a strategy starting in 2000 to grow by acquiring branded pasta and hiking production. Its products appeared on store shelves under various local and regional brand names. When the plans began failing and the company faced Chapter-11 bankrupcy, then-CEO Timothy Webster and CFO Warren Schmidgall played with accounting to artificially increase stock price by the millions.
U.S. Attorney John Wood says each man faces up to five years in prison and fines, some from the Securities and Exchange Commission. In the federal prosecutor's words,
"...in addition, the company itself has agreed to pay a seven point five million dollar fine for the wrongfully and illegal actions of its former management. Now I do want to emphasize here that the conduct in question was all by the former management of the company."
Wood won't reveal how many millions investors lost, saving that for ammunition when the men are sentenced.