The American Italian Pasta Company has announced that former chairman Horst Schroeder has resigned from its board of directors.

Schroeder was named chairman in 1991 when he came to American Italian from Kellogg. His resignation comes a week after an amended federal lawsuit implicated Schroeder, along with a number of other current and former company executives, in the charge that the company hid declining finances from shareholders using a number of accounting and operating tricks.

Stock in the American Italian Pasta Company have dropped by 84% since August, when the company revealed that it could not release third-quarter results as its audit committee had launched an internal investigation into the company’s accounts. In October, the company told investors that financial reports as far back as 2002 were unreliable.

Amid worries brought to the fore by the lawsuit this week, the company’s stock fell by 41% in a single day. On Friday shares fell to US$3.43 on the New York Stock Exchange.

Schroeder’s resignation came into effect on 25 January.

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The company did not provide further details of the resignation and was unavailable for comment.