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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Wednesday, November 17, 2010

Former Kmart CEO Ordered to Pay $5.5 Million

On November 15, 2010, the United States District Court for the Eastern District of Michigan entered an Amended Final Judgment against Charles C. Conaway, the former Chief Executive Officer of Kmart Corporation, ordering that he pay disgorgement of $3 million, representing part of a retention loan paid to him by Kmart, and a civil penalty of $2.5 million.  On August 23, 2005, the SEC charged Conaway with misleading investors about Kmart's financial condition in the months preceding the company's bankruptcy. On June 1, 2009, a jury returned a verdict in the SEC's favor on all charges following a three-week trial in Ann Arbor, Michigan.  On March 3, 2010, the court ordered Conaway to pay disgorgement in the amount of $5 million, together with prejudgment interest thereon in the amount of $2.85 million, and a civil penalty of $2.5 million.  The Amended Final Judgment represents a compromise of that judgment reached while Conaway's case was on appeal. 

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