Food vendor sentenced in insider trading case

December 14, 2006|By BLOOMBERG NEWS

NEW YORK -- A Rhode Island food vendor was sentenced to home detention yesterday on charges that he bought shares of U.S. Foodservice after he was secretly tipped about a takeover of the company by Dutch supermarket chain Royal Ahold NV.

Brady Schofield, who was president of Seafood Marketing Specialists Inc., was given six months' home confinement and three years' probation and fined $13,000 by U.S. District Judge George Daniels in New York.

Schofield admitted in June that he bought shares in Columbia, Md.-based U.S. Foodservice in 2000, after he was tipped to the takeover by a company executive. He earned $287,288 when the bid became public.

"I'd like to apologize," a crying Schofield said in Manhattan federal court as he was sentenced. "What I did was wrong."

Schofield, of Newport, R.I., could have received 12- to 18- months sentence under federal sentencing guidelines after pleading guilty to seven criminal counts related to insider trading and filing false documents. Daniels imposed a lesser sentence for reasons he did not explain.

Defense attorney Daniel Fetterman declined to comment after the sentencing. He told Daniels that Schofield was a "dedicated family man."

Ahold, owner of Giant-Landover and other U.S. supermarket chains, admitted in 2003 that it overstated profit by $1.22 billion, mostly related to fraud involving rebates at U.S. Foodservice.

Schofield, 39, is one of more than a dozen food vendors who admitted that they helped U.S. Foodservice doctor records by submitting false verifications of purchase orders.

Several U.S. Foodservice executives, including former Chief Financial Officer Michael Resnick and former marketing chief Mark Kaiser, pleaded guilty or were convicted after a trial.

Prosecutors, who have said they won't charge the company, claimed that investors lost $6 billion in the fraud. Amsterdam, Netherlands-based Ahold in 2004 settled civil claims brought by the U.S. Securities and Exchange Commission without paying a fine, ending a 20-month investigation.

The Securities and Exchange Commission brought a related civil case against Schofield.

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