Bradley David Edson, 51, of Scottsdale, Ariz., pled guilty to one count of conspiracy to commit Honest Services Wire Fraud which is punishable by a maximum fine of $250,000 and a maximum prison term of five years, or both.
Edson was indicted by a federal grand jury on April 11, 2012, for one count of Conspiracy to Commit Securities and Wire Fraud, one count of Securities Fraud, nine counts of Wire Fraud, five counts of False Certification on Periodic Reports, four counts of False Statements to Auditors of a Publicly Traded Company, and seven counts of Transactional Money Laundering.
“This indictment is an example of the complex, white-collar cases our agency has a reputation for investigating. The case against Mr. Edson involves a number of entities and a variety of complicated financial transactions. IRS Special Agents have the training and expertise to unravel these types of activities,” said Dawn Mertz, Special Agent in Charge of the Phoenix Field Office of Internal Revenue Service, Criminal Investigation.
The indictment alleged that from December 2005 to March 2009, Edson served as the President and Chief Executive Officer of NutraCea, a publicly traded Arizona neutraceutical company that developed, manufactured, and distributed different forms of stabilized rice bran. The indictment also alleges that, as a publicly traded company, NutraCea was required to comply with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) which required it to: (1) make and keep books, records, and accounts that accurately and fairly reflected NutraCea’s transactions and the disposition of its assets; (2) devise and maintain a system of internal accounting controls that provided reasonable assurances to the investing public that its transactions were recorded in a way that would permit accurate preparation of financial statements; and (3) file quarterly and annual reports with the SEC that accurately and fairly presented NutraCea’s financial condition, which were to be certified by certain NutraCea executives.
As NutraCea’s CEO, Edson was accused of defrauding investors, the SEC, and NutraCea’s auditors in order to inflate NutraCea’s stock price, to obtain proceeds from the sale of inflated NutraCea stock, and to obtain financial and other compensation from NutraCea.
In 2006, Edson executed sham agreements so that NutraCea could report an additional $750,000 in sales, which artificially inflated its net income from approximately $750,000 to approximately $1,500,000.
In 2007, Edson engaged in sham transactions to artificially inflate NutraCea’s income by $3.6 million.
In early 2008, Edson deceived NutraCea’s auditors into approving and recording a 2007 sale of its “Rice n Shine” product, worth $1.9 million.
Edson falsely certified to the SEC that NutraCea’s public filings were fairly presented, even though he knew that NutraCea’s revenues were artificially inflated.
Edson covertly received a $600,000 kickback from a debt acquisition deal.
Edson agreed to pay restitution to the victim, NutraCea, in an amount the court determined “shall be no greater than $600,000 but no less than $260,000.