Charges against Koch Foods CEO not dismissed
A federal judge has refused to dismiss Security and Exchange Commission claims that the CEO of Koch Poultry helped mislead auditors about $856 million worth of income, a federal judge ruled.
Joseph Grendys was accused in 2007 of violating the Securities and Exchange Act by submitting false and misleading audit confirmation letters with regard to promotional allowance payments the company made to U.S. Foodservice, which bought and distributed Koch's food products.
U.S. Foodservice was found to have overstated its promotional allowance income for fiscal years 2000 to 2002 in the amount of $856 million, reports Courthouse News Service. Grendys and other U.S. Foodservice vendors "allegedly signed and submitted false and misleading audit confirmation letters" to the company's auditor that backed its bogus income statements.
Grendys moved to dismiss and to strike statements from the SEC's filings, but U.S. District Judge Colleen Kollar-Kotelly refused on both counts Wednesday."A reasonable trier of fact could conclude from the evidence submitted that Mr. Grendys had actual knowledge of the primary violations, knew the information he was providing in the audit confirmation letter was false or misleading and that his conduct substantially assisted the primary violations," she wrote.
Source: Courthouse News Service, Dow Jones