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7 Plead Guilty in U.S. Foodservice Probe



The men, who were mostly mid-level sales executives or food brokers at small firms in the Midwest and Northeast, have surrendered to federal authorities. They face a maximum of five years in prison and a $250,000 fine when they are sentenced. At the same time, the suppliers settled related civil charges filed by the Securities and Exchange Commission by agreeing to pay $25,000 each.

Each of the men allegedly submitted false letters to Columbia, MD-based U.S. Foodservice's independent auditors, either misrepresenting how much in rebate payments the distributorship earned or how much it was owed by the suppliers, thenewsstoriessaid. U.S. Foodservice and its Dutch parent company, Royal Ahold NV, have faced regulatory scrutiny since February 2003, when word of the scheme came to light.

The incident not only rocked U.S. Foodservice and Ahold but also compelled the supply chain to look at its promotional allowances accounting practices.

The guilty pleas marked the first public action in the case since January, when federal prosecutors in New York charged nine other vendors with criminal misbehavior.

Former U.S. Foodservice marketing executive Mark P. Kaiser and onetime leading attoryney Michael J. Resnick are expected to face trial next February on conspiracy, securities fraud, and false filings charges stemming from the rebate inflation. They have pleaded not guilty.

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