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SEC files fraud charges three former Kmart executives, four managers of vendor companies

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SEC files fraud charges three former Kmart executives, four managers of vendor companies

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By MARCY GORDON

AP Business Writer

WASHINGTON (AP) -- Federal regulators on Thursday filed civil fraud charges 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.

The Securities and Exchange Commission, which has been investigating Kmart's decline into bankruptcy, said the 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. They neither admitted nor denied wrongdoing.

The cases 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.


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