Former Penn Traffic Executives Facing Federal, Civil Charges

SYRACUSE, N.Y. — Les Knox and Linda Jones, two former executives of Penn Traffic here, are facing charges of securities and mail fraud related to improperly accounting for promotional allowances at the retailer between 2000 to 2003, officials of the U.S. Attorney’s office and the Federal Bureau of Investigation said Monday. If convicted on the most serious charges, the defendants could each face prison sentences of 20 years and fines of $5 million. Knox, Penn Traffic’s former senior vice president and chief marketing officer, and Jones, vice president, non-perishable merchandising, were dismissed by Penn Traffic more than a year ago after an internal accounting investigation revealed “improper practices.” Federal authorities say Jones and Knox led a scheme to “pull forward,” or prematurely recognize, more than $9 million in income from vendors related to slotting, rebates and other fees. The Securities and Exchange Commission on Monday said it has launched a separate civil action against Jones and Knox, alleging Knox and Jones routinely lied to accounting personnel at the company and submitted false invoices to carry out their scheme. The SEC is seeking disgorgement of ill-gotten gains, civil monetary penalties and to bar the executives from serving as officers of public companies.

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