Rent-Way Share Price Plummets Over Suspected Ledger Tampering

Rent-Way Inc., the No. 2. U.S. operator of rent-to-own stores, said it suspects two executives of putting fake entries in the company’s ledgers to boost earnings, sending its shares plunging 78%.

The suspected executives are Jeffrey Conway, the president and chief operating officer who was asked to temporarily give up his duties Monday, and Matthew Marini, the now-suspended corporate controller, said Ron DeMoss, the company’s general counsel.

“We are saddened and embarrassed to have to bring this news to our shareholders, families and friends,” Chief Executive and Chairman William Morgenstern told reporters.

Morgenstern said the company now expects to take a noncash charge of $25 million to $35 million for the fiscal year that ended Sept. 30.

Based on a preliminary investigation, Rent-Way said it expects earnings for the current fiscal year to be between 88 cents and $1.14, far lower than earlier guidance of $1.83 a share.

Rent-Way, based in Erie, Pa., employs 6,000 people nationwide in its stores, which rent household appliances to those who cannot afford to purchase the items outright.

Late last week, several company employees brought word of the accounting irregularities to the company, DeMoss said. Rent-Way’s first announcement of its investigation was made Monday afternoon.

The accounting irregularities seem to include adjustments to rental merchandise, certain fixed asset write-offs and other operating expenses, the company said.

The company’s audit committee is investigating the matter with the help of its regular outside counsel. PricewaterhouseCoopers also has been brought in to assist the investigation.

Conway and Marini were unavailable for comment.

The company’s shares plummeted $18.44 on the news to close at $5 on the New York Stock Exchange.