- The Washington Times - Thursday, May 17, 2007

NEW YORK (AP) — The former chief marketing officer of U.S. Foodservice Inc., a Columbia, Md., subsidiary of supermarket giant Royal Ahold NV, was sentenced to seven years in prison yesterday for his role in a widespread securities fraud.

Mark Kaiser, 52, of Ellicott City, Md., could have received life in prison for crimes that the federal prosecutor called “an astonishing degree of corruption at the highest levels of corporate America.”

“I have learned I made bad decisions and bad mistakes,” Kaiser told the judge. “The past four years have been a suffocating experience. I wouldn’t wish them on my worst enemy, if I had one.”

The Netherlands company’s U.S. properties include the Giant Food and Stop & Shop chains. U.S. Foodservice 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 had portrayed Kaiser as the creator of a fraud to overstate earnings by $800 million from 2000 to 2003 by reporting fake rebates from suppliers, moves that increased their own bonuses.

Defense lawyer Richard 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 pleaded for leniency as well, telling U.S. District Judge Thomas P. Griesa 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,” Judge Griesa added. “He had a leadership role, and he got other people into trouble.”

Ahold said in 2003 that it had overstated its earnings by more than $1 billion, mostly because of the fraud at U.S. Foodservice, and its stock lost 60 percent of its value, shaving $6 billion from its market capitalization.

U.S. Foodservice routinely buys products from suppliers at full price, and the suppliers refund some of the price in rebates known as promotional allowances.

Ahold has said it cooperated with U.S. investigators and had taken measures to ensure such activity could not happen again.

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

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