As Bankrate’s successor in interest, Baton Holdings has agreed to pay $28 million to settle the accounting fraud charges against Bankrate.
According to the U.S. Justice Department, Baton admitted that former Bankrate executives inflated earnings, which led to at least $25 million in losses for shareholders. The company agreed to pay a penalty and restitution to settle the case.
Baton Holdings is a subsidiary of Red Ventures, which acquired Bankrate in 2017 after the fraud took place. After the acquisition, Red Ventures took Bankrate private and converted it to Baton Holdings.
As part of the resolution, Baton admitted that former execs orchestrated a complex scheme to artificially inflate Bankrate’s earnings using “cookie jar” accounting, meaning that expense accruals were left of the books and then selectively reversed later to boost earnings.
The financial services and marketing company also admitted that execs misrepresented company expenses as “deal costs” in order to inflate publicly reported adjusted earnings metrics and made false statements to auditors to conceal the accounting.
Former Bankrate CFO, Edward DiMaria, was sentenced to 10 years in prison last fall for his role in the scheme, and former VP of Finance Hyunjin Lerner received a 60-month sentence.
“This case reflects the department’s commitment to holding both individuals and institutions accountable for fraudulent conduct, and to obtaining restitution for the victims of fraud,” said Assistant Attorney General Brian Benczkowski.