A private equity fund gets caught with its hand in the cookie jar...

The NY Times reports on a fraud at Archway and Mothers Cookie Company and, according to the article, private-equity firm, Catterton Partners, was taking out millions in management fees while doing very little to manage the company. Ultimately, the article suggests that the company was booking fraudulent sales and stuffing the distribution channels after its products deteriorated under Catterton's (mis)management.

The article describes one distributor's experience of receiving excess and damaged inventory during the period when the company was channel stuffing in order to boost its sales numbers to keep financing coming. This distributor summed up his view of Catterton's role in the failure of the Cookie Company by saying:

“What soured me on this experience is that these private equity firms that come in and buy companies don’t look at a company to grow it. Whether it sinks or swims doesn’t really matter to them ... They don’t think about the people whose livelihoods depend on that company. I hope I never have to go through that again.”