CompUSA 2014 Annual Report Download - page 19

Our business depends largely on the efforts and abilities of certain key senior management. The loss of the services of one or more of
such key personnel could have a material adverse affect on our business and financial results.
From time to time, we are involved in lawsuits or other legal proceedings arising in the ordinary course of our business. These may relate
to, for example, patent, trademark or other intellectual property matters, employment law matters, states sales tax claims on
internet/ecommerce transactions, product liability, commercial disputes, consumer sales practices, or other matters. In addition, as a
public company we could from time to time face claims relating to corporate or securities law matters. The defense and/or outcome of
such lawsuits or proceedings could have a material adverse affect on our business. See “Legal Proceedings”.
Following the previously reported independent investigation of Gilbert Fiorentino and Carl Fiorentino by our Audit Committee in 2011
(in response to a whistleblower report) for a variety of improper acts, the subsequent termination of their employment and the entering
into by Gilbert Fiorentino of a settlement agreement with the Securities and Exchange Commission, on November 20, 2014 the United
States Attorney’s Office (“USAO”)
for the Southern District of Florida announced that Gilbert Fiorentino and Carl Fiorentino had been
charged with mail fraud, wire fraud and money laundering in connection with a scheme to defraud TigerDirect and Systemax.
Specifically, the charges set forth a scheme to obtain kickbacks and other benefits, and to conceal this illicit income from the IRS, all
while Gilbert Fiorentino and Carl Fiorentino were employed as senior executives at the Company’
s North America Technology Products
business. On December 2, 2014, the United States Attorney’
s Office announced that Gilbert Fiorentino and Carl Fiorentino had pled
guilty to various charges, and on March 3, 2015, Gilbert Fiorentino and Carl Fiorentino were sentenced to sixty and eighty months’
imprisonment, respectively. Following completion of their sentences, each is to be placed on supervised release for a period of thirty-
six
months. The Court also set a restitution hearing for April 10, 2015 to determine the amount of restitution Gilbert Fiorentino and Carl
Fiorentino are obligated to pay the Company.
As previously disclosed in a Form 8-
K filed on January 30, 2015, on January 27, 2015, the senior financial officer of the Company's North
American Technology Products segment testified before a federal grand jury in the Southern District of Florida pursuant to a subpoena.
The USAO has not advised the Company as to the nature or scope of the grand jury proceeding. Further, the Company's Audit
Committee, with the assistance of independent outside counsel, is cooperating with a current investigation by the USAO into allegations
arising from the Fiorentino investigation regarding possible executive officer conflicts of interest and conduct related to internal controls
and books and records. The Company's independent accountants and another adviser have also received a grand jury subpoena to appear
and submit documents in that regard. The Company does not currently believe these matters have had or will have a material effect on the
Company's previously reported consolidated financial statements. However, it is not possible at this time to predict when the current
investigation will be completed; what subject(s) will be investigated; what actions, if any, may be taken by the government as a result of
its investigation; or whether any of these matters will have a material adverse impact on the Company.
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• Our business is dependent on certain key personnel.
•
We are subject to litigation risk due to the nature of our business, which may have a material adverse effect on our results of operations
and business.