Former Craig CEO Convicted of Fraud

The former chief executive of now-defunct stereo maker Craig Consumer Electronics Inc. was convicted by a federal jury in Los Angeles on Thursday of inflating the company’s assets and receivables to obtain a $40-million line of credit from a consortium of banks.

After a two-month trial, Richard I. Berger, 60, of Rolling Hills Estates was found guilty of 12 criminal counts, including conspiracy, bank fraud, falsifying corporate records and making false statements to the Securities and Exchange Commission.

The jury deadlocked on more than 20 other counts against Berger and co-defendant Bonnie Metz, 53, of Newport Beach, who served as vice president and director of international trade for the Cerritos-based company. U.S. District Judge Robert Takasugi declared a mistrial on the unresolved charges. Berger’s lawyer, Brad Brian, said an appeal would be considered.

A third defendant, former Chief Financial Officer Donna Richardson, 46, of Dracut, Mass., pleaded guilty to three criminal counts and cooperated with the government.

Prosecutors charged that Berger cooked the company’s books to conceal the fact that Craig was in financial distress when he applied for the $40-million credit line from four banks, Sanwa Business Credit Corp., LaSalle National Bank, Nationsbank of Texas and BT Commercial Corp., a division of Bankers Trust of Delaware.

Craig’s company filed for bankruptcy protection in August 1997 and then ceased operations.

The bank consortium lost an estimated $8 million as a result of the fraud, which allegedly involved classifying defective goods as new or refurbished, falsifying bills of lading to make it appear the firm owned items it didn’t and billing stores for items that had not been shipped.

No sentencing date was set.