The former chief financial officer of Bankrate will spend the next 10 years in prison after admitting in court earlier this year that he falsified the company’s accounts in a scheme that ended up costing shareholders $25 million.
Back in June, Edward DiMaria pleaded guilty to one count of conspiracy to make false statements to a public company’s accountants, falsify a public company’s books, records and accounts, and commit securities fraud; plus one count of making materially false statements to the Securities and Exchange Commission.
According to the Department of Justice, DiMaria used his position at Bankrate, a publisher, aggregator, and distributor of personal finance content and lead generator for the financial services industry, to artificially boost the company’s earnings from 2010 through 2014.
Bankrate currently operates several different brands, including its flagship site: Bankrate.com, where consumers can get financial advice about a variety of financial products including mortgages, credit cards, auto loans, banking, and personal loans.
Last year, Bankrate was acquired by Red Ventures in a $1.24 billion deal.
But from 2010 to 2014, DiMaria was cooking the company’s books and causing shareholders to lose $25 million.
According to the DOJ, DiMaria admitted that during that time, he directed and conspired with others to engage in a complicated plot to artificially inflate the company’s earnings using “cookie jar” or “cushion” accounting. In the scheme, millions of dollars in unsupported expenses were purposefully left on Bankrate’s books and then reversed in later quarters to improve the company’s earnings.
Additionally, DiMaria admitted to conspiring with other Bankrate employees to misrepresent certain company expenses as “deal costs” to allow them to artificially inflate publicly reported adjusted earnings information.
DiMaria also admitted to lying to Bankrate’s auditors to hide the false accounting records, and admitted to causing materially misstated financial statements to be submitted to the SEC by Bankrate.
Hyunjin Lerner, Bankrate’s former vice president of finance, previously pleaded guilty for his role in the conspiracy and received a sentence of 60 months in prison.
In addition to receiving the 10-year sentence, DiMaria was ordered to pay restitution in the amount of $21,234,214. DiMaria will have three years of supervised release after he gets out of jail.
“While serving as Bankrate’s CFO, Edward DiMaria blatantly manipulated the company’s publicly reported financial statements by repeatedly lying and directing others to lie to auditors, regulators, and shareholders,” said Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division.
“The significant sentence handed down today underscores the serious nature of corporate fraud and the damage it causes to shareholders and to the public’s trust in our financial markets,” Benczkowski added. “The sentence also demonstrates the Department’s commitment to prosecuting corporate misconduct to the fullest extent of the law.”