What compels a person to commit a fraud worth $800 million? Mark Kaiser, former Chief Marketing Director for U.S. Foodservice, insisted to a federal judge that in his own case, it wasn’t “fueled or driven by greed.” U.S. District Judge Thomas P. Griesa disagreed – he sentenced Kaiser to seven years in prison for actions that he termed “deliberate.”

Throughout the trial, prosecutors pushed for a punishment of up to 20 years in prison and described Kaiser’s fraud as “an astonishing degree of corruption at the highest levels of corporate America.” Kaiser reportedly orchestrated a fraud that would overstate earnings by $800 million over the years 2000 to 2003 by falsifying supplier rebate reports – all of which left the fraud participants with more significant bonuses.

Kaiser was convicted in November of all six charges, which included one count of conspiracy, one count of securities fraud and four counts of making false filings with the SEC. In addition to his 84 month sentence, Kaiser was sentenced to two years of supervised release and ordered to pay a $50,000 fine.

Ahold, the holding company of Foodservice, claims that the fraud at Foodservice is mostly to blame for its own overstatement of earnings by more than $1 billion in 2003. As a result, Ahold stock value dropped by 60 percent and nearly bankrupted the company. According to reports, Ahold is in the midst of selling the subsidiary as a result of the scandal.

Commentary: Hopefully this helps close the book on this massive fraud and is part of the process to allow US Foodservice to focus on the future and not the past. On a side note, we were particularly amazed that the CEO of US Foodservice was never swept up in this scandal, despite the fact that it happened on his watch. Lucky Charms to him!