case
caseF&C INT
CASE 4.2
F&C INTERNATIONAL, INC.
Synopsis
Over two centuries, the Fries family of northern Kentucky and southern Ohio built a dynasty of sorts in the flavor industry. Alex Fries, a German immigrant with a background in chemistry, settled in Cincinnati during the early nineteenth century and a few years later established a flavor company. Throughout the nineteenth and twentieth centuries, Fries and his descendants owned, operated, or oversaw several flavor companies, the last of which was F&C International. In the early 1990s, F & C’s chief executive, Jon Fries, orchestrated a large-scale financial fraud that proved the undoing of the company and the family’s proud history in the flavor industry.
This case examines the role of three F&C officials in Jon Fries’ fraudulent scheme. Those individuals include the company’s chief operating officer who became F&C’s president and chief executive following Jon Fries’ departure, the company’s chief financial officer, and a controller of F&C’s important Flavor Division. Each of these individuals uncovered or stumbled across various evidence that indicated or at least strongly suggested that top management was manipulating the company’s financial records. The company’s chief operating officer failed to heed the warning of a subordinate, an F&C cost accountant, who insisted that the company had a multi-million dollar inventory “problem.” When a subordinate attempted to hand the division controller a document that contained written evidence of Jon Fries’ fraudulent scheme, the controller refused to accept the item. Finally, F&C’s frustrated chief financial officer resigned after discovering extensive irregularities in the company’s accounting records.
163
F&C International, Inc.--Key Facts
1. The Fries family of Cincinnati had a long and proud
CASE 4.2
F&C INTERNATIONAL, INC.
Synopsis
Over two centuries, the Fries family of northern Kentucky and southern Ohio built a dynasty of sorts in the flavor industry. Alex Fries, a German immigrant with a background in chemistry, settled in Cincinnati during the early nineteenth century and a few years later established a flavor company. Throughout the nineteenth and twentieth centuries, Fries and his descendants owned, operated, or oversaw several flavor companies, the last of which was F&C International. In the early 1990s, F & C’s chief executive, Jon Fries, orchestrated a large-scale financial fraud that proved the undoing of the company and the family’s proud history in the flavor industry.
This case examines the role of three F&C officials in Jon Fries’ fraudulent scheme. Those individuals include the company’s chief operating officer who became F&C’s president and chief executive following Jon Fries’ departure, the company’s chief financial officer, and a controller of F&C’s important Flavor Division. Each of these individuals uncovered or stumbled across various evidence that indicated or at least strongly suggested that top management was manipulating the company’s financial records. The company’s chief operating officer failed to heed the warning of a subordinate, an F&C cost accountant, who insisted that the company had a multi-million dollar inventory “problem.” When a subordinate attempted to hand the division controller a document that contained written evidence of Jon Fries’ fraudulent scheme, the controller refused to accept the item. Finally, F&C’s frustrated chief financial officer resigned after discovering extensive irregularities in the company’s accounting records.
163
F&C International, Inc.--Key Facts
1. The Fries family of Cincinnati had a long and proud