ERIE, PA. Rent-Way rebuilds after surviving accounting fraud

Three executives were asked to resign when the scandal broke.
ERIE, Pa. (AP) -- Rent-Way Inc., the nation's second largest rent-to-own company, could have easily collapsed under the weight of an accounting fraud scandal.
Instead, the Erie-based business can count itself among a unique class of publicly traded companies that stayed standing after such a scandal.
Last week, the scandal ended when federal investigators announced the guilty pleas of three former Rent-Way executives to doctoring reports filed with the Securities and Exchange Commission.
The company underreported operating expenses by $60 million in 2000 in an effort to meet earnings expectations, according to an SEC complaint filed Tuesday.
Rent-Way misstated income and earnings per share in quarterly reports in 1999 and 2000, and an annual report in 1999, according to U.S. Attorney Mary Beth Buchanan. The three executives were asked to resign in 2001.
Rebuilding
Bill Morgenstern, Rent-Way's chairman and chief executive, was an active member of Erie's business community until the accounting scandal broke in 2000. When the scandal broke, he diverted much of his attention to keeping his company alive and kept a lower profile.
Now, he hopes to be able to move forward. That means returning to profitability and rebuilding its corporate staff.
In the past year, Rent-Way downsized from more than 1,100 stores to 759. Its stock closed Friday at $4.78 per share, down from $23.44 the day before the accounting troubles were made public.
"We have a lot of work to do," Morgenstern said. "It's not going to happen overnight."