Former CFO of Bankrate, Inc. Pleads Guilty to $25 Million Securities Fraud Scheme
Bankrate Inc. is a publically traded financial services and marketing company. Edward J. DiMaria, former Chief Financial Officer of Bankrate, pleaded guilty for his role in an accounting and securities fraud scheme, which caused more than $25 million in shareholder losses.
DiMaria pleaded guilty to one count of conspiracy to make false statements to a public company’s accountants, falsifying a public company’s books, records and accounts, and commit securities fraud, and one count of making materially false statements to the Securities and Exchange Commission.
As part of his guilty plea, DiMaria admitted that he orchestrated a complex fraud scheme for the purpose of artificially inflating Bankrate’s earnings through so-called “cookie jar” or “cushion” accounting. In this accounting scheme, millions of dollars in unsupported expense accruals were purposefully left on the company’s books, then selectively reversed in later quarters to show a boost in earnings. DiMaria further admitted to conspiring with other Bankrate employees to misrepresent certain company expenses as “deal costs, ” that served to artificially inflate the publicly reported adjusted earnings metrics.
According to the Department of Justice, “DiMaria also admitted that he made materially false statements to Bankrate’s independent auditors to conceal the improper accounting entries, and that he caused Bankrate’s financial statements filed with the SEC to be materially misstated.”
The terms of DiMaria’s plea agreement require that he pay approximately $21 million in restitution to Bankrate’s shareholders. Sentencing is scheduled for September 11, 2018. Hyunjin Lerner, Bankrate’s former Vice President of Finances, pleaded guilty for his role in the conspiracy and was sentenced to 60 months in prison.
Criminal Investigations Group Inspector in Charge Daniel Adame of the U.S. Postal Inspection Service said: “Those who engage in this type of abuse of power while in positions of authority should know they cannot escape detection. They will be found and they will be held accountable for their actions.” He went on to say, “The U.S. Postal Inspection Service has a long history of investigating complex financial fraud schemes, like this one, in order to protect investors and the integrity of the financial marketplace.”
The U.S. Postal Inspection Service’s National Headquarters Fraud Team investigated this case, with assistance from the SEC, and the Criminal Division’s Fraud Section is prosecuting the case with assistance from the U.S. Attorneys’ Office for the Southern District of Florida.
Government and law enforcement agencies work in tandem to investigate alleged large-scale fraud schemes. In the government’s zeal to prosecute these types of crimes, law enforcement may unfairly target honest people and prosecutors may be less inclined to reduce charges or offer favorable plea deals. If you are facing charges for securities fraud, it is critical that you hire an experienced white collar criminal defense attorney skilled in handling complex fraud cases.
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