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COLUMBIA, Md. -- Rhode Island resident Brady Schofield, owner of Seafood Marketing Specialists, which supplied Ahold-owned U.S. Foodservice here, yesterday pleaded guilty in U.S. District Court in New York to six counts of insider trading and one count of conspiracy to falsify records, according to published reports. After entering his plea, Schofield expressed remorse for his actions.
In early 2000 Schofield learned from former U.S. Foodservice purchasing executive Timothy Lee that Ahold intended to purchase U.S. Foodservice, the charging document said. Aware that what he had received was nonpublic information, Schofield consequently bought about 28,000 shares of U.S. Foodservice for an average of $14.61 per share. He sold the shares a month later, a little while after Ahold made public its deal to buy U.S. Foodservice for $26 per share, earning almost $300,000 in illegal profit.
He also helped falsify records on promotional allowances, so that U.S. Foodservice paid the full cost of products from a certain supplier, but later received an agreed-upon kickback from that supplier. In connection with this scheme, Schofield knowingly signed audit confirmation letters containing false information about his companies' promotional allowances.
Last month, a court in the Netherlands sentenced Ahold's former c.e.o. and c.f.o. to suspended jail terms for their involvement in Ahold's financial restatement scandal.
Each of the insider trading counts carries a maximum sentence of 10 years in federal prison, while the count of conspiracy to falsify records carries a maximum penalty of five years in prison. Schofield could also be fined over $6 million. Sentencing has been set for September 13. The U.S. Securities and Exchange Commission has additionally filed civil insider trading charges in the case.