Kmart Corp.’s former Chief Executive Officer Charles Conaway misled investors about the company’s cash crisis in the months before its bankruptcy in 2002, a U.S. lawyer said in closing arguments at Conaway’s civil fraud trial.
The Securities and Exchange Commission, which is trying to bar Conaway permanently from serving as an officer of a publicly traded company, sued him in 2005, alleging he misled investors in a third-quarter 2001 securities filing and during a Nov. 27, 2001, conference call.
Conaway “dodged inconvenient information,” Alan Lieberman, an SEC lawyer, said today in U.S. District Court in Ann Arbor, Michigan. “He knew when to deny and blame others and say ‘nobody ever told me.’”
Jurors began considering the case today after both sides completed their closing arguments. If the jury of five men and five women finds Conaway is liable, U.S. Magistrate Judge Steven Pepe will determine what penalty to impose.
Kmart filed for bankruptcy protection on Jan. 22, 2002, after fourth-quarter sales fell, the surety bond market evaporated and some suppliers halted shipments. Conaway was fired two months later. Kmart subsequently shed 599 stores and fired about 57,000 workers.
Cash Shortage Hidden
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