Jewelry Executives Settle Suit, Face Prison

September 29, 2004

Jewelry Executives Settle Suit, Face Prison

Whitehall Jewellers, Chicago, agreed to pay $13 million to settle a lawsuit and a federal investigation into fraud charges, according to company Securities and Exchange Commission filings. Former Chief Financial Officer Jon Browne pleaded guilty Tuesday to federal bank and wire fraud conspiracy charges. He faces up to 30 years in prison and a $1 million fine, according to the Associated Press.

On Sept. 28, the U.S. Attorney's Office in Brooklyn, NY, said Whitehall, in a written agreement with the government, accepted responsibility for improper conduct by former executives and adopted significant corporate reforms to prevent similar conduct in the future.

In the case, Whitehall was sued by financing company Capital Factors Inc., which claimed the Chicago-based jeweler aided the now defunct New York-based gem supplier Cosmopolitan Gem Corp. in a $20 million accounting fraud. Two former Cosmopolitan employees, who aided Browne, face up to 30 years in prison when they are sentenced in March. Whitehall has 386 stores in 38 states.

by Michael Thompson

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