Monday, October 29, 2007

Penn Traffic execs facing criminal charges

Because of TPMtoday's hiatus, we failed to report this item when it happened a few weeks ago. As we reported several times last year, Penn Traffic, a 100+ store chain in the northeast, had been playing games with trade promo allowances.

I'll give you a moment to recover from the shock.

Now two of the company's former top executives -- Leslie Knox, the Chief Marketing Officer, and Linda Jones, a VP -- have been indicted.
Jones, 48, of Reynoldsville, Pa, and Knox, 61, of Titusville, Fla., were charged with conspiracy to commit securities and mail fraud and causing false filings to be made by Penn Traffic. If convicted, each faces a sentence of up to 20 years and fines totaling $5 million.

According to the complaint, Penn Traffic prematurely recognized promotional allowances from the second quarter of 2001 through at least the fourth quarter of 2003.

Knox and Jones directed and took part in the scheme in an effort to meet internal budget plans, the complaint said. As a result, the company pulled forward about $10 million in operating income that was included in Penn Traffic's public filings.

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