Edward DiMaria, the former CFO of Bankrate was sentenced 10 years in prison and asked to pay restitution of $21M for accounting fraud. DiMaria pleaded guilty to one count of conspiracy to making false statement’s to a public company’s accountant and one count of making materially false statement to the Securities and Exchange Commission.
In his defense DiMaria stated that the fraud did not bring down the company and amounted to only a small portion of the company’s revenue. Thats a strange defense! Federal prosecutors countered that the fraud cost the shareholders more than $25 million.
DiMaria admitted that from 2010 to 2014 he ran a scheme to artificially boost Bankrate’s earnings through “cookie jar” or “cushion” accounting. Millions of dollars in unsupported expense accruals were left on Bankrate’s books and then reversed in later quarters to inflate earnings. DiMaria called the cookie jar accounting an incremental smoothing of earnings!