The Securities and Exchange Commission has asked a judge to impose a $22.6 million judgment on former Kmart chief executive officer Charles Conaway after he was found liable on fraud charges earlier this year.
In a June 1 verdict, a jury in U.S. District Court in Ann Arbor, Mich., found that Conaway and his executive team had concealed the true financial state of Kmart from its shareholders prior to the firm’s bankruptcy in 2002.
The SEC submitted its recommendation for remedies in the civil case on July 30. In the memo, the agency asked Magistrate Judge Steven Pepe to order Conaway to return $8.9 million in compensation he received from the retailer, pay $4.8 million more in interest and another $8.9 million in civil fines.
SEC lawyers wrote that Conaway would not have been compensated as well had he not misled investors.
“If Conaway’s fraud was richly rewarding for him, it was devastating for Kmart, its employees and its shareholders,” government attorneys wrote in the memo. “Even if the fraud may not have caused Kmart’s bankruptcy, there is ample evidence that the fraud contributed to it.”
The agency also is seeking an order that bars Conaway from serving as an officer at publicly held companies.
Conaway’s lawyers have filed a motion for a new trial and new verdict in the ex-ceo’s favor.
Attorney Scott Lassar said Monday that his client had not profited improperly and that the SEC had used a retention loan as the basis of its calculations.
“The actions Conaway took were in the best interest of Kmart and its shareholders and he didn’t receive a penny from those actions,” Lassar said.
The SEC first filed its civil suit against Conaway in August 2005. The suit alleged Conaway and his leadership team overbought inventory in the summer of 2001, slowed payments to vendors and failed to disclose the situation to investors on Kmart’s third-quarter conference call.
Conaway’s co-defendant in the civil case, ex-chief financial officer John McDonald, settled with the SEC earlier this year. He agreed to pay $120,000 in penalties.
Kmart filed for Chapter 11 protection in January 2002. It emerged in 2003 as Kmart Holding Corp. and merged with Sears in 2004 to become part of Sears Holdings Corp., owned by private equity investor Edward Lampert’s ESL Investments.
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)
@heriethpaul and @gracebol have a moment on the @victoriassecret fashion show 2017. See every look from the runway on WWD.com. Link in bio. (📷: @giovanni_giannoni_photo) #wwdfashion #victoriassecret #VSFashionShow
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia