Baton Holdings, the successor company to financial services and marketing company Bankrate, has agreed to pay $28 million in fines to resolve a government investigation into accounting and a securities fraud scheme carried out by former executives.
In settlement documents with the U.S. Department of Justice (DOJ), Bankrate admitted former executives engaged in a scheme to artificially inflate the company’s earnings. The executives are said to have purposefully left millions in unsupported expense accruals on the company’s books and then selectively reversed them in subsequent quarters to boost company earnings, according to the DOJ.
As a result of the investigation, Bankrate’s former chief financial officer Edward Maria pleaded guilty for his role in the scheme and was sentenced to 10 years in prison and ordered to pay $21 million in restitution. Hyunjin Lerner, Bankrate’s former vice president of finance, also pleaded guilty for his involvement and was sentenced to 30 months in prison and ordered to pay $21 million in restitution.
“Today’s resolution with Bankrate’s successor in interest – together with the previously announced convictions of the company’s CFO and vice president of finance – closes the books on an accounting fraud that caused more than $25 million in losses to the company’s shareholders,” Assistant Attorney General Brian Benczkowski said in a statement. “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.”
Former Bankrate executives also misrepresented certain company expenses as “deal costs” in an effort to inflate publicly reported earnings metrics and subsequently lied about those earnings to independent auditors.
The fraudulent conduct, according to DOJ, cost Bankrate’s shareholders at least $25 million in losses.
Bankrate is a financial services and marketing firm that allows consumers to compare mortgage and credit card rates. Their website also provides financial literacy tools to help consumers build wealth and understand various loan options.