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first_img PHOENIX – The Associated Press (AP) has reported that former CSK Auto President Martin Fraser has died. Fraser, 55, collapsed and died while visiting a Las Vegas hotel with his wife. His death, according to recent media reports, will have an impact on the current criminal charges against him. Fraser and former CSK CFO Don Watson were both facing indictment charges that involved conspiracy, securities fraud, mail fraud, false filings with the U.S. Securities and Exchange Commission (SEC), false books and records and false statements to CSK’s auditor. Watson is charged separately with falsely certifying financial reports. Fraser, the former president and chief operating officer, and Watson, the former chief financial officer, allegedly engaged in a scheme from 2001 to 2006 to misstate CSK’s income by, primarily, concealing that the company had tens of millions of dollars of uncollectible receivables that it should have written off. Uncollectible receivables are funds that a company reports as income because it expects to collect the funds, but later determines the funds not to be collectable. According to the indictment, during the scheme, CSK operated under the brand names Checker Auto Parts, Schucks Auto Supply and Kragen Auto Parts. At the time the alleged earnings manipulation occurred, CSK was the largest specialty retailer of auto parts and accessories in the western United States and one of the largest such retailers in the entire United States.Advertisement According to the indictment, CSK purchased hundreds of millions of dollars worth of auto parts every year, and its vendors gave CSK allowances, or rebates, for products CSK purchased in exchange for CSK using the allowances, generally, for marketing of the vendors’ products for sale in its stores. The vendor allowances reduced CSK’s expenses and thus increased its income. As the indictment alleges, instead of writing off these uncollectible receivables, Fraser and Watson concealed them by moving vendor allowance collections from later years to cover the shortfalls in prior years; by moving uncollectible receivable balances to subsequent years to hide them; and by billing vendors to try to collect allowances CSK was not owed. As a result of the scheme, CSK allegedly misstated its receivables and pre-tax income in its annual reports (Forms 10-K) in fiscal years 2002, 2003 and 2004 by approximately $10 million, $24 million and $19 million, respectively. According to the AP, Fraser’s death means that federal prosecutors won’t be able to prove criminal charges that he manipulated earnings reports at the auto parts supplier. The government will seek to dismiss both the civil and criminal complaints against Fraser in light of his death; however, actions against the other remaining employees involved will likely continue, according to the report.Advertisement The SEC’s investigation into CSK Auto as a whole was settled in May 2009, not long after the company was acquired by O’Reilly Automotive Inc. in 2008. Editor’s Note: The following article has been updated to correct an error as it was published in Monday’s issue of aftermarketNews. Yesterday, aftermarketNews noted a story from the Associated Press regarding the death of former CSK Auto President Martin Fraser and its impact on the criminal indictment against him. The original story incorrectly stated the date of Fraser’s death. He passed way on Jan. 26. AdvertisementClick Here to Read MoreAdvertisementlast_img read more