Former Craig President Found Guilty In Fraud Trial
By Joseph Palenchar -- TWICE, 9/15/2003
LOS ANGELES— Former Craig president Richard Berger has been convicted here of defrauding four banks in a failed bid to keep the company afloat while it was going public in 1996.
The banks lost about $8 million in a scheme in which Craig inflated its accounts receivables and inventory to borrow more money than allowed under the banks' line-of-credit agreements, which totaled $40 million. The company was liquidated in 1997.
Many investors lost their entire investments in Craig, according to the U.S. Attorney's office here.
Berger, 60, was found guilty on 12 felony counts, including six counts of loan fraud, one count of conspiracy, and one count of falsifying corporate books. The U.S. District Court jury also found him guilty of one count of making false statements to company accountants and three counts of making false statements in SEC filings.
Berger faces a maximum penalty of 30 years in federal prison for each of the loan fraud counts and up to five years for each of the other charges, the U.S. Attorney's office said.
The jury wasn't able to reach a verdict on 24 other counts against Berger or on 21 counts against Bonnie Metz, 54, Craig's VP and international trade director. A federal grand jury had accused her of conspiracy, loan fraud, wire fraud and falsifying Craig's books and records.
At a Sept. 15 hearing, the government will announce whether it will retry Berger and Metz on the unresolved counts.
A third defendant, Donna Richardson, 44, previously pleaded guilty to bank fraud and cooperated with the U.S. Attorney, which expects a sentencing hearing to be scheduled for Nov. 11. She was Craig's treasurer, secretary and CFO.
