updated 1/13/2005 1:53:09 PM ET 2005-01-13T18:53:09

Criminal charges have been filed against nine vendors accused of taking part in a scheme to inflate earnings of a subsidiary of supermarket giant Royal Ahold NV by more than $800 million, federal prosecutors said Thursday.

The vendors conspired with executives of the subsidiary, U.S. Foodservice Inc., to create false accounting records, Manhattan U.S. Attorney David Kelley said in a press release.

Kelley said at a news conference that he expected “most, if not all” of the nine vendors to plead guilty to the charges.

They are accused of taking part in the alleged scheme by signing a false audit letter that overstated money owed to U.S. Foodservice, one of the country’s leading food distributors.

Among those charged were John Nettle, former account manager for General Mills Inc., and Michael Rogers, former vice president of sales for Tyson Foods Inc.

The nine were charged with allegedly taking part in a scheme to falsify books and records. Two of the nine were also charged with conspiring to trade on inside information relating to a 2000 Ahold stock offering.

All nine voluntarily surrendered to authorities Thursday morning.

Separately, the Securities and Exchange Commission filed civil charges against the nine charging them with aiding “a massive financial fraud” by signing the false audit reports.

In July 2004, four executives of U.S. Foodservice were accused of conspiring to inflate earnings by reporting $800 million in fake rebates from suppliers.

Ahold said in early 2003 that it had overstated its earnings by more than $1 billion, mostly because of the alleged fraud at U.S. Foodservice, and its stock lost 60 percent of its value. About $6 billion in market value evaporated.

U.S. Foodservice routinely buys products from suppliers at full price, and the suppliers refund some of the price in rebates known as promotional allowances.

Kelley said new the charges sent a message that corporate insiders “cannot turn to third parties for help in manipulating financial results.”

He said it was the largest known prosecution of suppliers who committed fraud simply to maintain a positive business relationship.

“You’re likely to hear some more down the road,” he said. “We’re going to continue scouring the landscape. "Criminal charges have been filed against nine vendors accused of taking part in a scheme to inflate earnings of a subsidiary of supermarket giant Royal Ahold NV by more than $800 million, federal prosecutors said Thursday.

The vendors, whose names were not immediately released, conspired with executives of the subsidiary, U.S. Foodservice Inc., to create false accounting records, Manhattan U.S. Attorney David Kelley said in a press release.

The nine are accused of taking part in the alleged scheme by signing a false audit letter that overstated money owed to U.S. Foodservice, one of the country's leading food distributors.

Kelley planned a news conference later Thursday to discuss the charges.

In July 2004, four executives of U.S. Foodservice were accused of conspiring to inflate the earnings by reporting $800 million in fake rebates from suppliers.

Ahold said in early 2003 that it had overstated its earnings by more than $1 billion, mostly because of the alleged fraud at U.S. Foodservice, and its stock lost 60 percent of its value. About $6 billion in market value evaporated.

U.S. Foodservice routinely buys products from suppliers at full price, and the suppliers refund some of the price in rebates known as promotional allowances.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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