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In the Courts

BY ALM Staff
July 28, 2010

Second Circuit Panel Reverses Conspiracy and Securities Fraud Convictions

A three-judge panel from the Second Circuit, in an opinion authored by Circuit Judge Rosemary S. Pooler, unanimously reversed the convictions of former U.S. Food Services (“USF”) Chief Marketing Officer Mark P. Kaiser on five counts relating to alleged fraudulent misrepresentations regarding the financial condition of his former employer, one of the country's largest distributors of food products, and Royal Ahold N.V. (“Ahold”), which acquired USF in April 2000.

The charges centered on the use of “promotional allowances” (“PAs”), a type of rebate paid to USF once pre-determined purchasing targets were met. In particular, the indictment charged the former executive with devising a scheme to fraudulently inflate USF's 2001-2002 income from PA's. Additionally, Kaiser was alleged to have acted to hide these numbers from outside auditors and to have made a number of misrepresentations regarding PAs to auditors.

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