The Securities and Exchange Commission charged former Systemax CEO Gilbert Fiorentino with taking more than $400,000 in fraudulent compensation from companies that did business with the Port Washington, N.Y.-based company.
According to the SEC, Fiorentino also allegedly stole several hundred thousand dollars of Systemax merchandise that was used to market the company's products. Fiorentino failed to disclose this extra compensation and perks to Systemax or its auditors, the SEC alleges.
Fiorentino was released from his post in April 2011 as a result of the company's independent investigation of allegations regarding the company's Miami-based operations, according to Systemax.
Systemax was not named as a defendant in the SEC complaint.
"Fiorentino also demanded and received from $5,000 to $10,000 monthly from an entity that supplied materials to Systemax's subsidiaries for use in retail and mail order operations. He received these payments from at least January 2006 through at least December 2010," the SEC alleges in the complaint.
The SEC requires that companies detail any and all compensation for their top executives and Systemax did not report this extra compensation for Fiorentino. Fiorentino signed SEC corporate ethics documents that did not include the compensation in question, according to the SEC.
"Fiorentino routinely signed management representation letters to the Company's independent auditors from at least June 2006 until at least May 13, 2010, that stated: 'We have no knowledge of any fraud or suspected fraud involving management or other employees who have a significant role in the Company's internal control over financial reporting,'" according to the complaint. Eventually, Fiorentino agreed to resign from all of his positions with Systemax, surrender about $9.1 million in stock and stock options and repay his 2010 annual bonus of $480,000, according to the SEC.
According to the SEC, Fiorentino agreed to settle the charges without admitting or denying the allegations. As part of a settlement with the SEC, Fiorentino has agreed to be permanently barred from ever serving as an officer or director of a publicly held company and to pay an additional $65,000 penalty.
"Fiorentino brazenly stole from Systemax and betrayed the trust of its shareholders," said Eric I. Bustillo, director of the SEC's Miami Regional Office, in a statement. "His actions demonstrate that he is unfit to serve as an officer or director of a public company."
PUBLISHED SEPT. 18, 2012