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U.S. Securities and Exchange Commission


Litigation Release No. 18578 / February 17, 2004


The Securities and Exchange Commission (Commission) announced today that on February 17, 2004 it filed a complaint in federal district court in Newark, New Jersey against Dean A. Nichols (Nichols), a certified public accountant and a senior manager at a subsidiary of Performance Food Group Company (PFG), a large public company. The complaint alleges that, during 2000 and 2001, Nichols engaged in a fraudulent course of conduct in which he made numerous improper accounting journal entries on the books of AFI Foodservice Distributor, Inc. (AFI), a subsidiary of PFG. Nichols' conduct caused PFG to overstate its income by a total of $3.8 million in the company's Forms 10-Q filed with the Commission for the second and third quarters of 2000, and for the first and third quarters of 2001.

Nichols, an executive vice-president and one time controller of AFI, was responsible for AFI's accounting functions and financial statements. During 2000 and 2001, he repeatedly failed to reconcile imbalances in various AFI accounts, and made improper accounting adjustments in an effort to make the accounts appear to balance. Because AFI's accounts were consolidated with PFG's, Nichols' actions caused PFG materially to overstate its reported net earnings. Nichols never notified PFG's management or accounting personnel of the account imbalances or of his improper accounting adjustments.

On March 11, 2002, PFG announced that it had identified accounting errors in the financial statements of a subsidiary. The company later filed a Form 10-K for 2001 in which it reported its corrected net income for all of 2000 and 2001.

The complaint against Nichols seeks an injunction, disgorgement plus prejudgment interest, and a civil penalty based on his violation of, and/or aiding and abetting violations of, the antifraud, reporting, and books and records provisions of the federal securities laws (Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-13 and 13b2-1, thereunder).

SEC Complaint in this matter


Modified: 02/18/2004