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U.S. Securities and Exchange Commission


Litigation Release No. 20568 / May 13, 2008

Accounting and Auditing Enforcement Release No. 2825 / May 13, 2008

Securities and Exchange Commission v. Brian Spears, Civil Action No.08-00820 (CCK) (D.D.C.) (filed May 13, 2008)

SEC Settles Fraud Action Against Former U.S. Foodservice Vice President Brian Spears

The Securities and Exchange Commission today filed a settled civil injunctive action against Brian Spears, a former Vice President of Purchasing at U.S. Foodservice (USF). The complaint alleges that Spears and others at USF, then a subsidiary of Royal Ahold (Koninklijke Ahold N.V.) (Ahold), engaged in a large-scale fraud that, for fiscal years 2001 and 2002, materially overstated operating income by an aggregate amount of approximately $700 million in Commission filings and other public announcements.

The Commission's complaint further alleges that Spears and others at USF induced third parties to confirm false information to USF's outside auditors. Spears and others at USF did this to make it falsely appear that amounts recorded on USF's books and records as accounts receivable were earned. As alleged in the complaint, Spears called vendors at USF's 2001 fiscal year-end and 2002 fiscal year-end and worked with others at USF to convince the vendors to sign the confirmation letters and return them to USF's auditors.

Spears has agreed to settle the Commission's action, without admitting or denying the allegations in the complaint, by consenting to the entry of a final judgment permanently enjoining him from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13b2-2 thereunder. The final judgment orders disgorgement of $45,000 and prejudgment interest thereon in the amount of $15,547, but waives payment of all disgorgement and prejudgment interest and does not impose a civil penalty, based on the sworn representations in Spears' Statement of Financial Condition and other documents and information submitted to the Commission. The final judgment also bars Spears from serving as an officer or director of a public company for five years. The settlement is subject to approval by the Court.

The Commission's investigation is continuing. The Commission acknowledges the assistance and cooperation of the Office of the United States Attorney for the Southern District of New York and the New York Office of the Federal Bureau of Investigation.

SEC Complaint in this matter



Modified: 05/13/2008