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Lawyers for Ex-Kmart VPs Seek SEC Internal E-Mail

NEW YORK — Lawyers for two former Kmart Corp. vice presidents facing federal securities fraud charges have asked a judge to give them a government e-mail that raised questions about the strength of the case, according to a wire service report....

NEW YORK — Lawyers for two former Kmart Corp. vice presidents facing federal securities fraud charges have asked a judge to give them a government e-mail that raised questions about the strength of the case, according to a wire service report.

This story first appeared in the July 22, 2003 issue of WWD.  Subscribe Today.

Enio A. Montini Jr. and Joseph Hofmeister were indicted in February on charges of securities fraud, making false statements to the U.S. Securities and Exchange Commission and conspiracy to commit those offenses. They are accused of inflating the company’s earnings for part of the year before the discount retailer’s January 2002 bankruptcy filing.

According to another news report, an attorney for Montini said he discovered an e-mail from the branch chief of the SEC’s enforcement division, Reid Muoio, that accidentally was placed in a box of documents for him to review. The e-mail, which the defense said involved a discussion of the weaknesses in the government’s case, was sent Feb. 19, a week before a grand jury in Detroit returned the indictment, according to a letter from the SEC, according to press reports.

Separately, a court filing by the U.S. Attorney’s Office on Friday disclosed the names of six people who are expected to be witnesses in the trial of Montini and Hofmeister, also according to reports. They include former Kmart chief financial officers Jeff Boyer and Al Koch. The trial is set to begin in October.

If convicted, Montini and Hofmeister each face maximum prison terms of 10 years on the securities fraud charge, as well as a $1 million fine for the offense.

Montini was senior vice president and general merchandise manager of Kmart’s drugstore division. Hofmeister was the vice president of merchandising within the same division. Neither of the two could be reached for comment Monday.

Kmart closed nearly 600 stores and terminated 57,000 employees as part of its more than 15-month reorganization. It emerged from Chapter 11 proceedings in May and has said it plans to return to profitability.