S.E.C. files lawsuit against former ConAgra executives
January 17, 2007
by Eric Schroeder
WASHINGTON — The Securities and Exchange Commission on Tuesday filed a civil suit against three former executives of a ConAgra Foods Inc. subsidiary, alleging they overstated profits in 1999 and 2000.
James Charles Blue, the former president and chief executive of ConAgra Agri Products Cos., Randy Cook, the former president of North American Operations of United Agri Products, and Victor Campbell, UAP’s former controller, were named in the lawsuit filed Jan. 16 in U.S. District Court for the District of Colorado.
According to the S.E.C. lawsuit, the three executives participated in a series of fraudulent accounting practices that included: "the improper recognition of revenue from deferred delivery sales and associated rebates from its suppliers; the failure to record bad debt expenses when realized; and the improper recognition of revenue from advance vendor rebates."
The S.E.C. said ConAgra overstated income by $46.7 million in fiscal 1999 and $48.5 million in fiscal 2000. UAP accounted for about 13% of ConAgra’s sales, and 9% of the company’s profits, during those years.
ConAgra said in 2001 that accounting problems at United Agri Products would result in $120 million in lower earnings for 1998 through 2000.
Mr. Blue and Mr. Campbell have agreed to settle the suit without admitting or denying the allegations in the complaint. In total, Mr. Blue will pay $622,087, while Mr. Campbell has agreed to pay $198,074.
The S.E.C. said it is seeking a permanent injunction on Mr. Cook against future violations, an officer-and-director bar, and civil penalties. The complaint also seeks to have Mr. Cook divest all unexercised stock options.
In 2003, ConAgra Foods Inc. sold its Colorado-based farm supply business to a group led by management and a New York-based investment firm for $600 million in cash and securities.