Feds charge another ex-Carter's exec with fraud
ATLANTA (AP) — Another high-ranking executive of kids' clothing maker Carter's Inc. is facing fraud charges after federal prosecutors on Tuesday charged the former president of the Atlanta-based company with cooking the firm's books.
Joseph Pacifico, 62, was charged with securities fraud, filing false financial statements and falsifying records of a public company while he was president of the company. Pacifico left Carter's in December 2009 after the company disclosed prosecutors were investigating its finances.
The charges came as part of a new indictment against 57-year-old Joseph Elles, a former Carter's senior vice president who pleaded not guilty last year to more than 30 charges that he lied about the company's financial situation and then sold shares of its stock when the price was artificially bloated.
Pacifico didn't immediately return calls seeking comment on Tuesday. Elles' defense attorney declined to comment, but he has said he was confident his client would be exonerated.
The indictment claims Pacifico was aware by April 2009 that Elles gave rebates worth tens of millions of dollars to Kohl's Corp., the firm's largest customer, and then hid those discounts in financial statements. It said Pacifico lied to senior managers, signed false documents and told employees not to disclose the rebates to cover-up the fraud.
As a result, the company's quarterly financial reports didn't reflect the cost of the discounts between November 2006 and July 2009.
The reports helped buoy the company's stock price, and Elles earned $4.7 million from selling stock shared between 2004 and 2009, according to authorities. The share price then plummeted by more than 20 percent when the company announced it discovered the accounting issues in December 2009.
Elles and Pacifico could both face decades in prison if found guilty of all the charges. A court hearing for Pacifico has not yet been set.
U.S. Attorney Sally Quillian Yates said the charges were a sign that prosecutors were willing to follow the evidence "even to the top of the corporate ladder."
"Shareholders expect and deserve far more from their corporate leaders," she said.