Quantcast
Home / News / Economy / 2 more Charlotte cleaning company execs charged with fraud

2 more Charlotte cleaning company execs charged with fraud

CHARLOTTE – Two more former high-level executives at Charlotte-based cleaning company Swisher Hygiene have been charged in connection with an accounting fraud case.

Former Chief Financial Officer Michael Kipp, 61, of Charlotte and former External Reporting Director Joanne Viard, 36, of Santa Rosa Beach, Florida, were indicted Monday.

Both face charges including conspiracy to commit securities fraud, securities and wire fraud, and obstruction of justice. Kipp is also charged with one count of bank fraud.  The conspiracy charge carries a maximum prison sentence of five years. The securities fraud, wire fraud and obstruction charges carry a maximum term of 20 years each, and the bank fraud charge carries a maximum sentence of 30 years.

Attorneys for both defendants could not be reached for comment.

Charlotte-based Swisher is a publicly traded company that provides hygiene and sanitation services to businesses.

Earlier this month, the U.S. Attorney for the Western District of North Carolina said Swisher had agreed to accept responsibility and pay a $2 million fine for a long-running scheme to make its results appear better than they really were by hiding losses and inflating profits.

The charges stem from what the U.S. Attorney ’s Office calls a “scheme to defraud the investing public by materially misrepresenting Swisher’s financial position” in fiscal 2011. Under a deferred-prosecution agreement, Swisher agreed to cooperate fully with the continuing investigation.

A former senior accounting official, John Pierrard, 49, of Delray Beach, Florida, has agreed to plead guilty to fraud charges.

According to the court documents, Swisher inflated its adjusted earnings to meet or exceed management’s forecasts and concealed the fraud from its auditors, the financial institution with which it had a credit agreement and the public.

According to the U.S. Attorney’s Office, the scheme began to unravel when Swisher’s then-controller pushed back on making a fraudulent entry during the year-end close.  The controller wrote in an email, “I’ll run it by BDO [Swisher’s auditors] so we’re on the same page,” to which Kipp responded, “You’ll run it by me since I’m the chief accounting officer. I’m out of patience with this.”

The controller refused to book the fraudulent entry and Kipp fired him.  Swisher’s audit committee learned of the controller’s allegations and commissioned an independent internal investigation.  After the allegations of fraud were reported, Kipp and Viard almost immediately began to engage in misleading conduct to conceal the accounting fraud conspiracy and to obstruct justice by lying to the investigators hired by the audit committee, according to the U.S. Attorney’s Office.

Court documents say the company moved expenses that were supposed to be booked to its profit-and-loss statement to its balance sheet, which reduced costs and boosted income. Swisher also engaged in “cookie jar” accounting practices in which a company cuts into reserves to boost financial results.

Swisher said in early August that it had sold its Canadian operations for nearly $2.8 million. Three days later it said it was selling its U.S. assets to Minnesota-based Ecolab Inc. for $40 million. Swisher said that $2 million of that amount was “subject to a holdback for working capital adjustments.” The U.S. assets are all that remain of the company’s operating interests, Swisher said.

The deal is subject to stockholder approval.

—    The Associated Press, Staff Writer Roberta Fuchs and Managing Editor Sharon Roberts contributed to this report

Leave a Reply

Your email address will not be published. Required fields are marked *

*

 

%d bloggers like this: