Detroit Federal regulators are seeking more than $22 million from the former head of Kmart Corp., who was found liable for misleading investors about the company's finances before a bankruptcy filing in 2002, according to the Associated Press.
In a court filing, the U.S. Securities and Exchange Commission is asking a judge to punish Charles Conaway for "intentionally lying" to Wall Street and concealing information from Kmart directors. The SEC accused Conaway of failing to disclose that Kmart was delaying payments to suppliers to save cash in late 2001. In June, a federal jury in Ann Arbor, Mich., ruled in favor of the government.
Kmart's board forgave a $5 million loan to Conaway when he departed in March 2002 and also paid $3.88 million in tax liabilities associated with it. The government is seeking that sum, plus interest, as a recovery of "ill-gotten gains."
In addition, the SEC wants U.S. Magistrate Judge Steven Pepe to order an $8.8 million fine. Together, it all adds up to $22.56 million.