A U.S. financial firm has agreed to pay US$28 million in penalties and restitution after admitting that several of its executives engaged in an earnings manipulation scheme.
The U.S. Department of Justice (DoJ) announced that it has reached a deal with Baton Holdings LLC, which was formerly known as Bankrate Inc., a financial services and marketing firm. The company will pay US$28 million as part of a non-prosecution agreement to resolve securities and accounting fraud charges.
The DoJ says that Bankrate admitted that former executives at the firm “engaged in a complex scheme to artificially inflate Bankrate’s earnings through so-called ‘cookie jar’ or ‘cushion’ accounting, whereby millions of dollars in unsupported expense accruals were purposefully left on Bankrate’s books and then selectively reversed in later quarters to boost earnings.”
The firm also admitted that the fraudulent conduct caused shareholders to lose at least US$25 million.
Last year, the company’s former chief financial officer pled guilty for his role in the scheme and was sentenced to 10 years in prison and ordered to pay US$21.2 million in restitution. Its former vice president of finance also previously pled guilty and was ordered to serve 30 months in prison and to pay US$21.2 million in restitution.
“Today’s resolution with Bankrate’s successor [Baton Holdings]—together with the previously announced convictions of the company’s CFO and vice president of finance—closes the books on an accounting fraud that caused more than $25 million in losses to the company’s shareholders,” said assistant attorney general Brian Benczkowski.