Feds charge pair in cheese-making scamWAYNE PARRY
NEWARK, N.J. - They touted their cheese as better than the rest, and their company was hailed as one of the best small businesses in America.
But a federal court indictment claims the success story of now-defunct cheese maker Suprema Specialties was full of holes. The company's former chief executive and chief financial officer are accused of participating in a massive scheme with customers and suppliers to claim more than $600 million in non-existent sales.
Mark Cocchiola, 49, of Englewood Cliffs, a founder of the Paterson-based company, and Steven Venechanos, 46, of New Milford, its chief financial officer and corporate secretary, were charged Monday in a 38-count indictment, accused of conspiracy, bank fraud, securities fraud, mail and wire fraud.
The indictments came the same day that the U.S. Securities and Exchange Commission filed a civil complaint against the pair, alleging they broke securities laws and regulations.
Before it collapsed in 2002, Suprema was hailed in the financial press as among the best-performing small companies in the country. It was twice named to Forbes magazine's top 200 small companies, and made Fortune magazine's top 100 list.
"Suprema was essentially an illusion as a business, and a lie for investors," said U.S. Attorney Christopher Christie. "It was in business to provide a means for fraud."
Attorneys for both defendants did not immediately return calls seeking comment Tuesday.
The federal indictment claims the men participated with major customers to falsely inflate Suprema's sales by creating false invoices to make it appear as if the company had sold cheese to the customers.
The scheme also involved the company having vendors ship imitation cheese products that Suprema then labeled as higher-priced, premium, all-natural Italian cheese. This falsely boosted the value of the company's inventory, prosecutors said.
The phony financial numbers were reported to Suprema's lenders, to the SEC and to investors through traveling investment tours, according to the indictment. The company managed to land $140 million in lines of credit before it fell apart three years ago.
Cocchiola made more than $2.5 million from stock sales, and Venechanos got more than $1 million, prosecutors said. They could get 30 years in prison if convicted.
In January 2004, three former customers and a former Suprema manager pleaded guilty to conspiracy, securities fraud and food adulteration. Last March, a different former customer admitted conspiracy and securities fraud charges.