Ex-Friedman's CEO Stinn sentenced to 12 years

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Ex-Friedman's CEO Stinn sentenced to 12 years

April 30, 2009

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Brooklyn, N.Y.--Bradley Stinn, the former chief executive officer of Friedman's, was sentenced to 12 years in federal prison for a fraud scheme that prosecutors said cost the jewelry chain's shareholders more than $20 million.

According to a release from the U.S. Attorney's Office, Senior U.S. District Judge Nina Gershon handed down the sentence in the U.S. District Court in Brooklyn, N.Y., on Wednesday, after a federal jury found Stinn guilty of securities fraud, mail fraud and conspiracy on March 24, 2008, following a six-week trial.

While at the helm of Friedman's and Crescent Jewelers, which was publicly traded on the New York Stock Exchange, the 49-year-old Stinn led a multi-year securities fraud scheme that inflated Friedman's reported financial performance and hid from the stock market the problems the company was having in collecting debt for hundreds of millions of dollars worth of jewelry sold on credit, according to the release.

"As part of the scheme, Stinn and his co-conspirators repeatedly lied to shareholders and the investing public about Friedman's financial performance, made false and fraudulent representations to Friedman's auditors and manipulated the company's accounting in order to prevent auditors from discovering the falsity of Friedman's financial statements," the press release said.

At the sentencing, the court found that Stinn's fraud scheme cost Friedman's shareholders and other victims to lose more than $20 million, according to the release.

In addition, several months after the government launched its investigation into Friedman's in November 2003, its stock was de-listed from the stock exchange, and the company ultimately filed for bankruptcy in January 2005.

Though it was able to reorganize and emerge, the chain filed again in January 2008, and has since liquidated its stores and gone out of business.

Friedman's was once one of the largest jewelry chains in the country, ranking as the third-largest jewelry retailer in North America by store count in National Jeweler's 2008 State of the Majors report, with a count of 455 stores and a reported $300 million in jewelry and watch sales in 2007.

Benton J. Campbell, U.S. attorney for the Eastern District of New York, announced the sentence.

Assistant U.S. attorneys Scott B. Klugman, Ilene Jaroslaw, James G. McGovern, Tanya Y. Hill and Laura Mantell prosecuted the case.

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