Former Kmart CEO is accused of being involved in financial fraud

The former head of Kmart, Charles Conaway, was found liable Monday for misleading investors about company finances before a bankruptcy protection filing in 2002. As he said to jurors he was hired to save the retailer.

The verdict in the civil fraud trial was announced after 10 days of testimony here in federal court. The case was a look at Charles Conaway's brief tenure and his attempts to keep Kmart afloat.

The Securities and Exchange Commission blamed former Kmart CEO for concealment of the fact that the retailer was delaying payments to suppliers to save cash. The SEC accused Conaway of not sharing details in the report's management-analysis section. Conaway testified that he didn’t read it and relied upon his CFO and others.

U.S. Magistrate Judge Steven Pepe will handle the penalty phase of the SEC's case. Charles Conaway could be forbidden to work as executive in a public company.

Kmart emerged from the Chapter 11 bankruptcy as a smaller company and now is part of Sears Holdings.