Seven former officers and directors of former bankrupt cataloger Spiegel Inc. have settled financial impropriety charges with the Securities and Exchange Commission.

The officers included former co-presidents Michael Moran and James Sievers, former CEO Martin Zaepfel, former CFO James Cannataro, and former Treasurer John Steele.
Also signing onto the settlement were former chairman Michael Otto, former director Michael Crusemann, and former CEO Martin Zaepfel.

Under the settlement, Moran, Sievers, Cannataro and will each pay a civil penalty of $120,000. Otto and Crusemann will each pay a $100,000 and Zaepfel will pay $170,000 without admitting or denying the allegations, according to the SEC.

In addition, Moran, Sievers, Cannataro, Steele, Otto, Crusemann and Zaepfel have consented to a permanent injunction enjoining them from future violations of the federal securities laws, according to the SEC.

The SEC alleged in its complaints that Moran, Sievers, Zaepfel, Cannataro and Steele improperly increased inter-company fees between Spiegel’s retail subsidiaries and Spiegel’s bank subsidiary, which had the effect of hiding the deteriorating performance of the company’s credit card receivables portfolio.

Consequently, Spiegel was improperly able to benefit financially from that portfolio, according to the SEC.

The commission also alleged that Otto, Crusemann and Zaepfel all participated in the decision not to file Spiegel’s 2001 financial report and first quarter 2002 statement on a timely basis.

Prior to the April 15, 2002 deadline for filing the 2001 annual report, Spiegel’s outside auditor informed the company that it would file a “going concern” opinion along with the report unless Spiegel was able to resolve its underlying financial problems, the SEC continued.

When Spiegel failed to resolve those problems by the deadline, according to the SEC complaint, the company improperly elected to withhold its filing rather than make the required disclosures to the investing public.

The SEC began investigating Spiegel in 2003 as a result of these audit concerns, as reported by Catalog Age.

Seven former officers and directors of former bankrupt cataloger Spiegel Inc. have settled alleged financial impropriety charges with the Security and Exchange Commission.

Signing the settlement were former co-presidents Michael Moran and James Sievers, former CEO Martin Zaepfel, former CFO James Cannataro, and former Treasurer John Steele, in connection with the overstatement of the performance of Spiegel’s credit card receivables portfolio.

Also signing were former chairman Michael Otto, and former director, Michael Crusemann, and former CEO Martin Zaepfel over an alleged decision to withhold required financial reports to avoid issuance by its outside auditor of an opinion of Spieg3el’s financial viability.

Under the settlement, Moran, Sievers, Cannataro and will each pay a civil penalty of $120,000. Otto and Crusemann will each pay a $100,000 and Zaepfel will pay $170,000 without admitting or denying the allegations, according to the SEC.

In addition, Moran, Sievers, Cannataro, Steele, Otto, Crusemann and Zaepfel have consented to the Court’s issuance of an order of permanent injunction enjoining them from future violations of the federal securities laws, according to the SEC.

The SEC alleged in its complaints that Moran, Sievers, Zaepfel, Cannataro and Steele improperly increased inter-company fees between Spiegel’s retail subsidiaries and Spiegel’s bank subsidiary, which had the effect of hiding the deteriorating performance of the company’s credit card receivables portfolio.

Consequently, Spiegel was thus able to improperly benefit financially from that portfolio, according to the SEC.

The commission also alleged that Otto and Crusemann and Zaepfel all participated in the decision to not file Spiegel’s 2001 Form 10-K and first quarter 2002 Form 10-Q on a timely basis.

Prior to the deadline for the filing of the Form 10-K, Spiegel’s outside auditor informed the company that it would file a “going concern” opinion along with the filing unless Spiegel was able to resolve its underlying financial problems, the SEC continued.

When Spiegel failed to resolve those problems by the April 15, 2002 deadline, the company improperly elected to withhold its filing rather than make the required disclosures to the investing public, charged the SEC.

In light of the above, the Commission alleged that Moran, Sievers, Zaepfel, Cannataro and Steele violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and violated and aided and abetted violations of various books and records and financial reporting provisions of the Securities Exchange Act of 1934.

The Commission also alleged that Otto, Crusemann and Zaepfel aided and abetted Spiegel’s violations of the financial reporting provisions of the Exchange Act. According to the SEC.

This case dates back to 2003 when he SEC began investigating Spiegel because of its late filings of its 2001 annual report and its 2002 quarterly reports (Direct Newsline, Feb. 4, 2003).