NEW YORK — Bradley Stinn, former chief executive officer of jewelry retailer Friedman’s Inc. and its affiliate, Crescent Jewelers, on Monday was found guilty of conspiracy to commit securities fraud, mail fraud and wire fraud by a jury in a Brooklyn federal court, according to the U.S. Attorney’s Office.
This story first appeared in the March 25, 2008 issue of WWD. Subscribe Today.
The conspiracy charge is the most serious, carrying a maximum sentence of 30 years imprisonment, said the U.S. Attorney’s Office in Brooklyn.
According to the U.S. Attorney, Stinn, 48, and others participated in a “massive accounting fraud scheme” whereby they made false statements about the financial condition of the company to the investing public. The indictment, which was handed down a year ago, arose from sales by customers financed by the retailer’s installment credit program and the subsequent understatement of the delinquency of Friedman’s credit portfolio, which allegedly gave investors a false impression regarding the collectability of the credit accounts.
Friedman’s said in November 2003, following the disclosure of the government’s investigation, that its previously filed financial statements for fiscal years 2000, 2001 and 2002, as well as the first three quarters of fiscal year 2003, would be restated. Friedman’s subsequently filed for Chapter 11 bankruptcy court protection in January 2005.
The government’s investigation has led to guilty pleas from Friedman’s former chief financial officer and its former controller, the U.S. Attorney’s office said.