Motorcar Parts & Accessories' ex-CFO admits improper accounting

Washington DC September 19, 2002; Bloomberg News reported that Motorcar Parts & Accessories Inc.'s former chief financial officer agreed to plead guilty to charges that he falsified company books overstating pretax earnings in 1997 and 1998, regulators said.

The Justice Department and Securities and Exchange Commission said ex-CFO Peter Bromberg submitted a plea agreement today admitting guilt to two fraud charges, each carrying penalties of up to 10 years in prison and a $1 million fine. Bromberg admitted directing employees to engage in fraudulent accounting and to falsify Motorcar's books, the agencies said in a press release.

Without admitting or denying wrongdoing, Torrance, California-based Motorcar settled related SEC civil charges, agreeing not to commit future violations and opening the company to more severe penalties if it does, the agencies said.

"Neither Mr. Bromberg nor I have any comment," said Bromberg's lawyer, Richard E. Drooyan of Munger, Tolles & Olson in Los Angeles.

"The company was not fined and was not required to pay any other monetary penalty," said Motorcar's lawyer, James L. Sanders of McDermott Will & Emery in Los Angeles.

The SEC alleged that Bromberg and the company overstated the company's pretax earnings by $3.4 million -- almost 60 percent --for the 1997 fiscal year and by $3.6 million -- almost 50 percent -- for the 1998 fiscal year. Bromberg was the company's CFO from 1994 until he resigned in 1999.

The federal allegations focused on how the company accounted for and credited customers for returned parts. The company fixes up used automobile starters and alternators and resells them to parts retailers.

Previously, Motorcar agreed to pay $7.5 million to settle investor lawsuits alleging that it misstated earnings for three years. The company's previous auditor, Richard Eisner & Co. LLP withdrew its certification of the company's results for the three years ending March 1998 after discovering accounting problems, primarily related to returned products, according to SEC filings.

Motorcar's stock traded on the Nasdaq Stock Market in 1997 and 1998. It was delisted by Nasdaq in 1999 and now trades on the over-the-counter market. Motorcar's shares fell 5 cents to $3.05 in today's trading.