WASHINGTON (AFX) - A former CEO of catalog retailer Spiegel Inc. and four other ex-executives on Thursday agreed to pay civil fines to settle federal regulators' charges they participated in concealing the true condition of credit card debt carried on the company's books.
The Securities and Exchange Commission announced the settlement with former CEO Martin Zaepfel; the former co-presidents, Michael Moran and James Sievers; former chief financial officer James Cannataro, and former treasurer John Steele. The SEC alleged, in a civil lawsuit filed in federal court in Chicago, that the former executives violated securities laws in a complex scheme in 2001-02 designed to hide the 'deteriorating performance' of the credit card debt that Spiegel had on its books.
In addition, former Spiegel board chairman Michael Otto and two former directors, Michael Crusemann and Horst Hansen, settled charges that they played a role in the decision to delay filing the company's 2001 annual report and first-quarter 2002 report to avoid having to disclose a unfavorable auditor's opinion.
Moran, Sievers, Cannataro, Steele, Otto, Crusemann and Zaepfel are paying a total $850,000 in civil fines. They neither admitted nor denied the allegations under the settlement but did agree to refrain from future violations of the securities laws. Hansen was not fined.
Moran, Sievers, Zaepfel, Cannataro and Steele improperly increased fivefold the fees that Spiegel's retail operations and its bank subsidiary charged each other, in an effort to hide the poor condition of its credit card receivables, the SEC said.
By sanctioning former directors as well as company executives, the SEC showed that it intended to hold directors accountable for their duty as corporate watchdogs, said agency Enforcement Director Linda Thomsen.
'Directors who keep important financial information from the investing public by purposely failing to file required financial reports will be sanctioned,' Thomsen said in a statement. 'Shareholders and investors deserve to know the unadulterated truth.'
Spiegel, the mail-order purveyor of clothing and home furnishings founded in 1865, filed for Chapter 11 bankruptcy protection in March 2003. It was restructured around its Eddie Bauer division, with Eddie Bauer Holdings Inc. now operating as an independent business selling outdoor-themed casual apparel through hundreds of retail stores, a catalog and a Web site.
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