- The Washington Times - Monday, February 17, 2003

TROY, Mich., Feb. 17 (UPI) — An internal investigation targets two former Kmart Corp. executives for alleged ties to consultants paid millions as the discount retailer headed into bankruptcy, according to a published report Monday.

The Detroit News said Anthony D'Onofrio and David Montoya were key figures in the company's internal investigation and that a federal grand jury would begin hearing witnesses soon.

Kmart reportedly is prepared to sue former managers to recover $28 million in retention loans awarded to ex-executives as Kmart slid further and further into debt in 2000. D'Onofrio received $2.5 million and Montoya $750,000.

U.S. Bankruptcy Judge Susan Pierson last Monday asked that D'Onofrio be held in contempt for refusing to respond to the company's subpoenas. Montoya reportedly took the Fifth Amendment in refusing to answer questions during a deposition by Kmart lawyers last December. He was fired in March 2002. Montoya is a former senior vice president.

D'Onofrio, who was fired as Kmart's chief supply executive last March, was scheduled to give a deposition Feb. 27, sources told the News.

They allegedly had a close relationship with Retail Strategies International Inc., a consulting company based in Rogers, Ark.

The News said D'Onofrio was partner and co-founder of InLed LLC, a consulting firm listed as an unsecured creditor owed $1.4 million for unspecified services.

D'Onofrio, Montoya, former Chairman Charles "Chuck" Conaway and former President Mark Schwartz were among 10 ex-Kmart executives accused of engaging in "gross dereliction" of performance of their employment agreements in a review released by Kmart's law firm on Jan. 25.

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