U.S. Foodservice Ex-Executive Gets 7 Years for Fraud

By Larry Neumeister
Associated Press
Friday, May 18, 2007

NEW YORK, May 17 -- The former marketing chief of U.S. Foodservice, a subsidiary of Dutch supermarket giant Royal Ahold, was sentenced Thursday to seven years in prison for his role in a widespread securities fraud.

"I have learned I made bad decisions and bad mistakes," Mark P. Kaiser, 52, of Ellicott City, told U.S. District Judge Thomas P. Griesa. "The past four years have been a suffocating experience. I wouldn't wish them on my worst enemy, if I had one."

Ahold's U.S. properties include the Giant and Stop & Shop supermarket chains. U.S. Foodservice, which is based in Columbia, Md., is one of the country's largest distributors of food products to restaurants and cafeterias.

Assistant U.S. Attorney Lawrence Gerschwer had asked for a sentence of up to 20 years. Prosecutors portrayed Kaiser as the creator of a fraud to overstate earnings by $800 million from 2000 to 2003 by reporting fake rebates from suppliers, increasing their own bonuses.

Defense lawyer Richard J. Morvillo asked that his client get no jail time, saying more than a dozen others who had pleaded guilty or admitted roles in the fraud were not sentenced to prison.

Kaiser also pleaded for leniency, telling Griesa that he was never "fueled or driven by greed in anything I have ever done."

The judge said he had to sentence Kaiser to prison because the criminal conduct was serious. "It was deliberate," Griesa said. "He had a leadership role and he got other people into trouble."

Ahold was forced to restate more than $800 million in earnings because of the fraud at U.S. Foodservice, and its stock lost 60 percent of its value. Two weeks ago, Ahold agreed to sell U.S. Foodservice to two private-equity firms for $7.1 billion dollars in a deal expected to close later this year.

Kaiser also was fined $50,000. He will remain free while the case is appealed. He was convicted in November after a one-month trial on securities fraud, conspiracy and false-filing charges.


© 2007 The Washington Post Company