NEW YORK -- Mark P. Kaiser, former marketing chief of Royal Ahold NV's U.S. unit, was falsely accused of helping lead a fraud at the company by a colleague trying to win leniency from prosecutors, his lawyer told jurors yesterday at the start of Kaiser's trial.
Kaiser is the last of more than 15 people to face criminal charges stemming from what the government says was an $800 million fraud at Columbia, Md.-based U.S. Foodservice.
In his opening statement, defense lawyer Richard Morvillo said his client was falsely implicated by former purchasing chief Timothy Lee, who later pleaded guilty.
Lee "knew his best chance was ratting on someone higher up in the company," Morvillo told jurors in Manhattan federal court. "He pinned it on Mark Kaiser."
Ahold, owner of Stop & Shop and Giant supermarket chains, admitted in 2003 that it had overstated earnings by 970 million euros ($1.22 billion), mostly related to fraud involving promotional allowances, or rebates, at U.S. Foodservice.
Amsterdam, Netherlands-based Ahold settled in 2004 with the U.S. Securities and Exchange Commission without paying a fine, ending a 20-month accounting fraud investigation.
Prosecutors said they won't pursue criminal charges against the parent company.
Michael Resnick, the former U.S. Foodservice finance chief, pleaded guilty last month to conspiracy.
Lee and another senior purchasing executive, William Carter, also pleaded guilty, as have more than a dozen food vendors who admitted that they helped U.S. Foodservice falsify records by submitting false verifications of purchase orders.
The government says Kaiser helped U.S. Foodservice overstate earnings from 2000 to 2003 by recording as income promotional allowances that hadn't yet been earned. Prosecutor Alex Lipman told jurors the fraud helped Kaiser win a bigger bonus.
"This case is about lies and it is about greed," Lipman said, adding that Kaiser and others "just made up" financial numbers.
Morvillo said Lee turned on Kaiser just as Royal Ahold was blaming its U.S. unit for fraud. Morvillo said a hasty and flawed investigation by the company's lawyers led to criminal charges against Kaiser. "People moved too quickly," Morvillo said.