Execs at the firm engaged in a massive scam to artificially boost its earnings numbers
Baton Holdings, the successor to financial-services comparison firm Bankrate will pay $28 million in penalties and restitution to resolve an investigation into a multimillion-dollar fraud scheme carried out by former Bankrate executives, the Justice Department has announced.
Between 2010 and 2014, Bankrate executives engaged in a scheme to artificially inflate the company’s earnings through “cookie jar” accounting, in which millions of dollars in unsupported expense accruals were purposely left on the books, then reversed in later quarters to boost earnings. Bankrate execs also misrepresented some company expenses as “deal costs” in order to artificially inflate publicly reported adjusted earnings metrics. They also lied to independent auditors and the Securities and Exchange Commission in order to cover up the scam.
Last year, former Bankrate CFO Edward J. DiMaria was sentenced to 10 years in prison for orchestrating the scheme. DiMaria was also ordered to pay more than $21.2 million in restitution. Hyunjin Lerner, Bankrate’s former vice president of finance, was also convicted for his role in the scam and sentenced to serve 30 months in prison and pay 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,” said Assistant Attorney General Brian A. Benczkowski. “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.”
