Auto Service World
News   December 18, 2003   by Auto Service World

Former Motorcar Parts and Accessories President Pleads Guilty to Fraud Charges


Richard Marks, the former president of auto-parts company Motorcar Parts and Accessories Inc., plead guilty to criminal charges that he falsely inflated revenue and has agreed to pay more than $1 million U.S. in fines, federal authorities said on Wednesday.
The charges related to manipulating finances and other business practices that lead to the company overstating its pre-tax earnings by as much as 60%, and running afoul of the U.S. Securities and Exchange Commission.
In a joint statement, the U.S. Securities and Exchange Commission and the local U.S. Attorney’s Office said Marks “engaged in fraudulent accounting practices and falsified Motorcar’s books and records,” leading Motorcar to make false statements in its 1997 and 1998 annual reports.
Torrance, Calif.-based Motorcar was formerly listed on the Nasdaq and now trades on the Pink Sheets. The shares were up 1 cent at $5.66 in afternoon trade.
The authorities said Marks had agreed to pay $1.2 million in fines to settle the SEC’s civil charges and also agreed to a ban on serving as an officer or director of a public company.
He has not been sentenced on the two criminal counts, which each carry a maximum penalty of 10 years in prison and a $1 million fine.
Among the schemes Marks engaged in, the SEC said, were double-counting of inventory, hiding returned merchandise from auditors by using off-site storage and lying to independent auditors. Because of Marks’ actions, the SEC said, Motorcar overstated pre-tax earnings by about 60 percent in fiscal 1997 and about 50 percent in fiscal 1998.
Peter Bromberg, the former chief financial officer of Motorcar, plead guilty in September 2002 to accounting fraud charges and is awaiting sentencing.
Both Bromberg and the company have also settled an SEC civil action relating to the accounting problems.


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