Former Rent-Way Exec Conway Sentenced
Nov. 26, 2003
ERIE, Pa. (AP) _ The former president and chief financial officer of Rent-Way Inc., the nation's second largest rent-to-own furniture company, has been sentenced to more than a year in prison for ordering subordinates to falsify earnings reports filed with federal regulators.
Jeffrey Conway, 46, now a consultant for Ruth's Chris Steakhouse, was sentenced Tuesday to 13 months in federal prison to be followed by two years of probation. He also must pay a $20,000 fine. Conway will likely report to a minimum security prison in Florida _ the nearest to his home in New Orleans _ within the next 60 days, federal prosecutors said.
Conway pleaded guilty in July to one count of conspiracy for his part in misstating Rent-Way's income and earnings per share in quarterly reports in 1999 and 2000, and an annual report in 1999. According to the Securities and Exchange Commission, Conway, former chief accounting officer Matthew Marini, and former senior vice president Jeffrey Underwood, worked together to make it appear the company met earnings expectations.
The fraudulent entries led the company to underreport operating expenses by $60 million during 1999 and the first three quarters of fiscal 2000, the SEC said.
Before Conway's sentencing, defense attorney Mickey Pohl told U.S. District Judge Sean McLaughlin that he hoped recent corporate scandals around the nation would not cause the judge to make an example of Conway.
``It seems to me that the United States has gotten its pound of flesh,'' Pohl said.
Conway previously reached a settlement with the SEC, which ordered him to surrender his CPA license, forbade him from holding another executive position and fined him nearly $360,000 _ more than half of his net worth, Pohl said.
Conway could have received as little as eight months in prison under federal sentencing guidelines, but U.S. Attorney Mary Beth Buchanan said a longer sentence was warranted because his actions set a course of events in motion that harmed Rent-Way's reputation, victimized shareholders and investors, and hurt his wife and three daughters.
According to the SEC, Conway told Marini to ``do whatever needed to be done'' to meet earnings targets. He then instructed Marini to not reveal exactly what had been done so Conway could maintain plausible deniability for the company.
McLaughlin said Conway's ``willful blindness'' and the seriousness of the crime led to the harsher sentence, despite the 50 letters of support the judge received from the community and former Rent-Way employees.
Conway, Marini and Underwood all resigned in October 2000.
Marini pleaded guilty in July to securities fraud and was sentenced Wednesday to 3 months in prison. Underwood, who pleaded guilty to falsifying books, records and accounts, is to be sentenced Dec. 19.