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DETROIT, Feb. 26 (UPI) -- A judge in Detroit ordered a former Kmart chief executive officer to pay more than $10 million for misleading investors before the retailer's 2001 bankruptcy.
Charles Conaway, who earned $1 million a month during a 20-month stint as Kmart's CEO, was ordered to pay repay the company a previously forgiven $5 million loan, plus interest on the loan and $2.5 million as a civil penalty, The Detroit News reported Friday.
The Securities and Exchange Commission filed charges against Conaway in 2005, charging the CEO and former Chief Financial Officer John McDonald with conspiring to cover up the company's financial difficulties with a strategy called "Project Slow it Down."
The executives at the time said late payments were due to technical glitches, rather than admitting the company was falling behind on its obligations.
U.S. Magistrate Judge Steven Pepe ordered the fine, but did not bar Conaway from serving as an executive in a public corporation.
Pepe's opinion said, "I find the violation to be serious and clearly wrong, but they do not approach the level of egregiousness found in many SEC (Securities and Exchange Commission) cases."
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