Archway, phony sales & Wachovia

Oh, No! What Happened to Archway?


SITTING in his office late one evening in April last year, Keith Roberts, the director of finance for the Archway & Mother’s Cookie Company, stared in shocked silence at the numbers on his desk.

He knew things had been bad — daily reports he had been monitoring for six months showed that cookie sales at the company had been dismal. But the financial data he was looking at showed much more robust sales.

“Where on earth had all of these sales come from?” Mr. Roberts recalls thinking to himself.

Tired, but intrigued, he began digging through orders and shipping and inventory records until, well after midnight, he reached the conclusion that Archway, based in Battle Creek, Mich., was booking nonexistent sales.

He reasoned that sham transactions allowed Archway, which was owned by a private-equity firm, Catterton Partners, to maintain access to badly needed money from its lender, Wachovia. Mr. Roberts’s investigation eventually caused Wachovia to pull its financing lines, helping to push Archway into bankruptcy last fall.


Wachovia, for instance, provided tens of millions of dollars in loans and lines of credit backed by assets to Archway despite the fact the company had not had a formal independent audit of its financial statements in three years.

Comment: What was missing? An independent audit!


  1. What is Cold Fusion? I code in ColdFusion. http://en.wikipedia.org/wiki/ColdFusion

  2. The Archway deal sounds similar to what a company I used to work for was doing for awhile, only they were doing it to keep stock prices up. From what I heard later, they didn't completely make up sales transactions, but forced suppliers to take higher quantities with the promise not to bill them until later, then they reported those transactions as "sales."

    It didn't help...they ended up laying off almost 40% of the company (including closing the Minneapolis office where I was employed) and were investigated by the SEC on various charges.


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