NEW YORK – Charles Conaway may have to face charges that he deceived investors after all.
A federal judge in Flint, Mich., has ordered Charles Conaway, the former chief executive officer of Kmart Corp., to stand trial on charges of misleading investors about the company’s financial condition in the months before its January 2002 bankruptcy.
According to published reports, U.S. District Judge Paul Gadola rejected a request from Conaway and former chief financial officer John McDonald that a civil complaint filed by the Securities and Exchange Commission in August 2005 be dismissed.
The SEC had alleged that the two made false statements about Kmart, which had been based in Flint, during a November 2001 conference call with investors. Kmart filed for bankruptcy two months later, leading to closure of many of its stores, termination of more than 50,000 employees and nullification of the company’s stock.
Kmart later reorganized and, early last year, acquired Sears, Roebuck & Co. Much of the equity in the new firm, Sears Holdings Corp., is held by Edward Lampert of ESL Investments.