SEC dishes out pasta company penalty

A US pasta company boss has paid $1m (£550,000) to settle allegations that he
and and his CFO engaged in fraudulent accounting.

The SEC said the company, American Italian Pasta Company, and its former
execs had fraudulently capitalised
period costs, manipulated AIPC’s trade promotion accounting, failed to write off
obsolete or missing spare parts, structured fraudulent round-tripping of cash
transactions and recorded false receivables.

Former chief exec Timothy S Webster agreed to pay more than $1m to settle the
charges, while the company itself paid a $7.5m penalty.

The fraudulent accounting, and other errors arising from inadequate internal
controls, resulted in the overstatement of AIPC’s pre-tax income for the
relevant period by approximately $59 million, or 66%, the SEC said.

‘This is another case where executives at the highest levels of a public
company sought to meet Wall Street’s earnings expectations at all costs,’ said
George B. Curtis, deputy director of the SEC’s division of enforcement.

Further Reading:

Read the SEC’s
statement