NEW YORK — Two former Kmart executives will have to answer to charges that include securities fraud beginning on Oct. 14.

On Tuesday, a federal district court judge in Detroit rejected a request that the indictments against Enio Montini Jr., 51, and Joseph Hofmeister, 52, be dismissed, clearing the way for the start of a trial next month.

As reported, the two were indicted on Feb. 26 on charges of securities fraud, making false statements to the Securities and Exchange Commission and conspiracy. In addition to the three-count indictment, both face charges in a civil complaint filed by the SEC. The SEC matter charges them with violations of the bookkeeping and reporting provisions of federal securities laws.

If convicted, Montini and Hofmeister each face maximum prison terms of 10 years on the securities fraud charge, as well as $1 million fines for the offense. The false statements and conspiracy charges carry lesser penalties of up to five years in prison and a fine of $250,000 each. A source in the U.S. Attorney’s Office said earlier this year that the prison terms likely would be served concurrently.

Another source said that the investigations by the SEC and U.S. Attorney’s Office, with the help of the Federal Bureau of Investigation, are ongoing.

A Kmart spokesman declined to comment on the specifics of the probe, and said only that “Kmart continues to cooperate with the investigations.”

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. Both left the company in May 2002 during a massive restructuring that followed the firm’s Chapter 11 bankruptcy filing four months earlier.

According to the indictment, the two defendants allegedly negotiated a multiyear contract with American Greetings Corp. to be Kmart’s sole supplier of greeting cards. Its sole competitor, which held 40 percent of Kmart’s business at the time, was Hallmark Cards Inc.

Under the terms of the contract, American paid Kmart an “allowance” of $42.4 million. The payment represented a $50,000 takeover fee for each store that had been stocked by Hallmark. The payment was made on June 20, 2001, although the contract wasn’t signed until Jan. 21, 2002, the day before Kmart’s bankruptcy filing.The $42.4 million was subject to repayment under certain circumstances, such as liquidated damages in the event Kmart terminated the agreement before its scheduled end date. It was supposed to have been recognized over the term of the agreement.

Instead, the two former executives allegedly “conspired” from November 2000 to Jan. 21, 2002, to have the retailer improperly recognize the entire amount in the second quarter ended Aug. 1, 2001, according to the indictments and the SEC’s civil action. That enabled Kmart to meet quarterly earnings expectations.

As reported, Kmart overstated its operating results by $42 million in the quarterly report filed with the SEC and understated its losses by 6 cents a share. Kmart has since restated earnings for the last three years.

Montini and Hofmeister were both scheduled to testify in December in connection with Kmart’s internal investigation, but elected to assert their Fifth Amendment right not to do so, according to papers filed by Kmart with the bankruptcy court in Chicago earlier this year. The internal investigation centered on what led to Kmart’s financial collapse and the need for the Chapter 11 filing in January 2002. As reported, Kmart exited bankruptcy proceedings on May 6.

Shares of Kmart Holding Corp., the successor company to Kmart Corp., on Wednesday closed on the Nasdaq at $27.48, up 68 cents, or 2.5 percent.

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