CRIME SEC files fraud charges against 3 former Kmart executives, 5 others

The company's decline into bankruptcy is being investigated.
WASHINGTON (AP) -- Federal regulators filed civil fraud charges Thursday against three former Kmart Corp. executives and five current and former managers of big vendor companies, saying they engineered a $24 million accounting fraud by the retailing giant in 2000-01.
The Securities and Exchange Commission, which has been investigating Kmart's decline into bankruptcy in 2002, said the discount retailer inflated earnings by improperly booking millions of dollars of payments from the vendors -- Eastman Kodak Co., Coca Cola Enterprises Inc., and PepsiCo Inc. and its Frito-Lay division.
Five of the former Kmart and vendor company executives settled the SEC's charges Thursday by agreeing to pay civil fines totaling $160,000 and to refrain from future violations of securities laws. In one case, a former Kmart vice president was prohibited for five years from serving as an officer or director of a public company.
The executives, who left the company before or shortly after Kmart's bankruptcy filing in January 2002, neither admitted nor denied wrongdoing.
Charges pending
Charges are pending against the other three executives: John Paul Orr, a former vice president of Kmart's photo division; David C. Kirkpatrick, a former national sales director for Coca Cola; and David N. Bixler, a former national sales director of PepsiCo's Pepsi-Cola division and current vice president and general manager of PepsiCo.
Attorneys for Orr and Kirkpatrick disputed the SEC's allegations and said they would be contested.