Craig Electronics

From: Wayne M. Smith <wmsmith_at_earthlink.net>
Date: Sat Jan 4 14:09:00 2003

Here's a little hard information.

Craig Electronics was a division of Craig Corp. On 12/31/85 the Los Angeles
Times announced that Bercor, a La Mirada-based distributor of consumer products,
bought the operating assets of Craig Electronics for an undisclosed sum.
Bercor, run by a guy named Richard Berger, then changed its name to Craig
Electronics.

Craig filed for bankruptcy on August 1, 1997 after restating earnings for 1996.
Just prior to the bankruptcy the company had shifted its business, dropping
video products in favor of CD players and boomboxes, and entering into product
reconditioning deals in China. Shortly after the bankruptcy, the SEC
investigated the company and the four top executives, including Berger, were
fired. Berger eventually agreed to pay a $25,000 fine to the SEC and be barred
from serving as a corporate officer for five years.

Following the bankruptcy filing, Craig was unable to obtain financing and the
bankruptcy court approved a foreclosure and inventory sale, including the sale
of the "Craig Electronics" name. The name was purchased in January 1998 by
Newtech, a company that sells CE products under own brand and the
White-Westinghouse name. At the time of the sale, Newtech stated that it
intended to keep the Craig brand at its 2 largest accounts -- Best Buy and
Circuit City.

In September 2000, Richard Berger and two other former Craig executives were
charged with 34 counts of conspiracy and fraud after allegedly misrepresenting
corporate revenue in an effort to secure a $40 million line of credit from a
group of banks. The banks reportedly lost $8 million and shareholders lost more
than $5 million.

The case is still pending with the trial scheduled for February 4, 2003 in
federal court in Los Angeles.

Here's the last news article I could find concerning an earlier trial
continuance.

-W

Craig Trial Pushed Back
By Joseph Palenchar
TWICE
4/19/2002 11:46:00 AM

Los Angeles - The bank-fraud trial of three former Craig Consumer Electronics
executives has been pushed back to October, according to the U.S. District
Attorney for the central district of California.

'We're moving forward to trial,' said a spokesman.

In September 2000, a federal grand jury indicted the three for allegedly
defrauding four banks in a failed bid to keep the company afloat before it was
liquidated in 1997.

The banks lost about $8 million in a scheme in which the executives borrowed
more money against the company's line of credit than allowed under the banks'
line-of-credit agreements.

Craig Consumer Electronics is not related to Golden Beach, Fla.-based NewTech, a
distributor that purchased the Craig name when Craig Consumer Electronics was
liquidated.

The indicted executives are former chairman and president Richard Berger, CFO
and treasurer Donna Richardson, and international trade director Bonnie Metz.
The grand jury said Berger and Richardson intentionally inflated Craig's
accounts receivable and inventory levels, enabling the company to exceed its
credit limit with the banks.

The grand jury's 34-count indictment charged the executives with conspiracy,
loan fraud, wire fraud, falsifying corporate books and records, lying to the
publicly-traded company's auditors, and making false statements in reports to
the SEC.

At one point, according to the U.S Attorney's office, one bank representative
'became suspicious when the bank was asked to pay for an overseas shipment of
audio equipment that Craig purportedly had owned. After the representative
announced that he intended to visit Craig's location in Cerritos [Calif.] that
same business day to obtain copies of certain shipping documents, Craig sent all
of its employees home in advance of his arrival, and the representative was
unable to review the shipping documents in question. The following day, Metz and
another Craig employee allegedly went to Craig's offices and shredded these
shipping documents.'
Received on Sat Jan 04 2003 - 14:09:00 GMT