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In the Courts
Former CFO of Bankrate Sentenced to 10 Years in Prison for $25 Million Fraud Scheme
In September 2014, Bankrate, Inc. (Bankrate), a consumer financial and marketing company, disclosed a Securities and Exchange Commission (SEC) investigation into accounting from 2012. In making this announcement, Bankrate also indicated that its 2011 and 2013 finances may also be unreliable. Edward DiMaria, Bankrate's Chief Financial Officer at the time, also stepped down after eight years serving in that role. However, he remained a senior vice president.
As early as 2015, in addition to DiMaria, the SEC also accused Bankrate's former vice president of finance (Hyunjin Lerner) and its former accounting director (Matthew Gamsey) of participation in a fraud scheme. After pleading guilty, Lerner was sentenced to 60 months in prison and both DiMaria and Gamsey reached settlements with the SEC. The same year, the company also agreed to pay $15 million to the SEC related to the improper accounting practices.
On Sept. 25, 2018, the Department of Justice (DOJ) announced that DiMaria had been sentenced to 10 years in prison, after pleading guilty in late June in the Southern District of Florida to charges of conspiring to make false statements to the company's accountants; falsifying Bankrate's books, records, and accounts; securities fraud; and making materially false statements to the SEC. According to DiMaria, for the period between 2010 and 2014 he utilized “cushion” (or “cookie jar”) accounting to inflate Bankrate's earnings, whereby the company maintained excessive reserves on its books from its profitable years to ensure reserves during less successful periods.
DiMaria must pay over $21 million in restitution and, following the 10 year term, the former CFO will be subject to supervised release for a period of three years.
In addition to the SEC, the DOJ credited the U.S. Postal Inspection Service for their assistance in investigating the fraudulent scheme perpetrated by DiMaria.
– Colleen Snow, Mayer Brown
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