NEW YORK -- The United States is seeking a 30-year prison term for Mark P. Kaiser, the former marketing chief of Columbia-based U.S. Foodservice who was convicted of conspiracy and fraud, his lawyer said.
Kaiser, convicted in November by a jury in New York, will be sentenced Thursday by U.S. District Judge Thomas Griesa. Kaiser's lawyer, Richard Morvillo, said in court papers yesterday that prosecutors asked for the lengthy sentence after claiming that the fraud had cut the market value of Royal Ahold NV, U.S. Foodservice's owner, by $6 billion and cost investors $800 million.
Kaiser should get no more than 27 months because the government's figures are inflated, Morvillo said.
Thirty years would be longer than the sentence imposed on former WorldCom Inc. Chairman Bernard L. Ebbers, who is serving 25 years for leading an $11 billion fraud, the largest in U.S. history.
"This case is a far cry from the parade of massive frauds that have been publicized over the last several years, like Enron, WorldCom, Qwest and Global Crossing," Morvillo wrote. "The defendants at the heart of the frauds at those companies wreaked far greater havoc on the public than Mr. Kaiser."
Kaiser was convicted of helping U.S. Foodservice overstate earnings from 2000 to 2003 by recording as income promotional rebates the company hadn't yet earned. Prosecutors said Kaiser was seeking to burnish his resume and succeed Jim Miller as chief executive of the subsidiary.
According to Morvillo, prosecutors claim the fraud drove down Ahold's market capitalization by $6 billion after news of the scheme came to light in 2003.
In fact, "Ahold's stock price rebounded to within 42 cents of its pre-announcement share price" within months, after its internal probes ended, the lawyer said.
Morvillo said it would be unfair to base Kaiser's sentence on a $6 billion drop in market value as prosecutors and the U.S. Probation Office are urging.
Morvillo said the government is relying on provisions of advisory U.S. sentencing guidelines that recommend a 30-year sentence for any loss of more than $100 million.
Prosecutors didn't present any evidence of the actual loss suffered by investors, Morvillo said. One issue to be discussed at the sentencing hearing is the amount of the loss, a clerk for the judge said.
"The 30-year sentence recommended by the Probation Office and embraced by the government is vastly disproportionate to what others in this and similar cases have received," Morvillo wrote.
"Indeed, it would place Mr. Kaiser in the company of recent history's most notorious corporate criminals - men who looted their companies for personal gain, causing the eventual collapse of corporate behemoths."
Yusill Scribner, a spokeswoman for U.S. Attorney Michael Garcia in Manhattan, declined to comment.
None of the other defendants sentenced so far, including Michael Resnick, the unit's former finance chief, have received jail sentences, Morvillo noted. Resnick was sentenced to six months of house arrest and three years' probation after pleading guilty to reduced charges. Other defendants include U.S. Foodservice vendors and some of its executives.
Kaiser, who remains free on bail, was found guilty of conspiracy, securities fraud and four counts of making false financial filings.
Ahold, owner of Giant Food-Landover and other U.S. supermarket chains, admitted in 2003 that it overstated profit by 970 million euros ($1.22 billion), mostly related to fraud involving rebates at U.S. Foodservice. Prosecutors said they won't charge the Amsterdam-based Ahold, which in 2004 settled civil claims by the U.S. Securities and Exchange Commission without paying a fine.
Royal Ahold said in November that it would put its U.S. Foodservice and Tops grocery stores up for sale.