The complaint alleges that Kevin Hall and Rosemary Meyer "engaged in improper professional conduct" because they missed several instances of improper revenue recognition in the bookkeeping at the second largest foodservice distributorship but didn't alert the company's audit committee. The complaint also claims that the auditors "discovered that U.S. Foodservice had recognized substantial unearned prepayments" that "explicitly contradicted USF management's repeated representations that USF did not obtain vendor prepayments."
The alleged overstatements continued after Royal Ahold NV acquired U.S. Foodservice in 2000, eventually totaling what the SEC says were $800 million in overstatements by Ahold from 2000 to 2003, when the scheme became known. KPMG stopped auditing U.S. Foodservice when Ahold bought it.
Ahold, without admitting or denying guilt, settled SEC charges in 2004 without having to pay a fine. Separately, last November, Ahold agreed to pay $1.1 billion to settle a class-action shareholder suit stemming from the accounting scandal. That same month, seven former suppliers of U.S. Foodservice agreed to plead guilty to conspiracy charges that they helped executives at the company meet earnings targets from 2000 to 2003 by inflating promotional allowances to Ahold by $800 million. So far, 16 former executives and suppliers have been charged criminally by Manhattan federal prosecutors in the alleged rebate-inflation scheme. Of those, 12 have pleaded guilty.