QUEST COMMUNICATIONS CFO GETS JUDGED FOR LISTING ASSETS SALES AS PRODUCT SALES

The following excerpt is from the SEC website:

February 28, 2012
“COURT ENTERS FINAL JUDGMENT AGAINST FORMER CFO OF QWEST COMMUNICATIONS INT’L ROBERT S. WOODRUFF
The U.S. Securities and Exchange Commission announced today that the United States District Court for the District of Colorado entered a Final Judgment dated February 3, 2012, in a civil action against Robert S. Woodruff, the former chief financial officer of Qwest Communications International Inc., a Denver-based telecommunications company. Woodruff, without admitting or denying the Commission’s allegations, consented to the entry of a Final Judgment that enjoins him from violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; finds that he is liable for disgorgement of $1,731,048, plus prejudgment interest of $640,427, imposes a civil penalty of $300,000; and prohibits him from acting as an officer or director of a public company for a period of five years. It is anticipated that the Commission will ask the Court to add the disgorgement, interest and penalty to a Fair Fund which was established in SEC v. Qwest Communications, Inc., Civ No. 04-cv-1267 (D. Colorado). The Commission thus far has distributed approximately $275 million from the Fair Fund to harmed investors
According to the SEC’s complaint, from at least April 1, 1999 through March, 2001, Woodruff and others at Qwest engaged in a large-scale financial fraud that hid from the investing public the true source and nature of the company’s revenue and earnings growth. The complaint alleged that, although Qwest publicly touted its purported growth in services contracts which would provide a continuing revenue stream, in fact, the company fraudulently and repeatedly relied on revenue recognition from one-time sales of assets known as “IRUs” and certain equipment without making required disclosures. The complaint also alleged that Woodruff and others fraudulently and materially misrepresented Qwest’s performance and growth to the investing public. The complaint further alleged that Woodruff sold Qwest stock in violation of the insider trading prohibition of the securities laws."

SEC BRINGS FRAUD CHARGES AGAINST IMPERIALI, INC.

The following excerpt is from the SEC website:

“On January 9, 2012, the Securities and Exchange Commission charged Florida-based Imperiali, Inc., one current and one former officer, and its former auditor for their involvement in a fraudulent disclosure and accounting scheme.

The SEC’s Complaint alleges that between 2005 and 2008, Daniel Imperato orchestrated a scheme to use Imperiali, a business development company that Imperato owned and controlled, to defraud investors by making it appear that Imperiali was a thriving multinational corporation with several wholly-owned businesses, when in fact it was nothing more than a shell corporation. The Complaint alleges that Imperiali raised approximately $2.5 million using offering materials that included numerous material misrepresentations and omissions, and that Imperato and Fiscina drafted, reviewed, and certified at least 16 materially false and misleading registration statements, periodic reports and current reports with the Commission on behalf of Imperiali. Among other things, the Complaint alleges that those filings overvalued Imperiali’s virtually worthless assets at amounts ranging from $3.5 million to $269 million, and failed to disclose the issuance of millions of shares of restricted stock. The Complaint also alleges that O’Donnell failed to audit Imperiali’s financial statements in accordance with Public Company Accounting Oversight Board (PCAOB) Standards, and issued audit reports on Imperiali’s financial statements that he knew or was reckless in not knowing contained materially false and misleading information.

The SEC’s complaint charges that Imperiali and Imperato violated, or aided and abetted violations of, Sections 5(a), 5(a), and 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; that Imperiali also violated Sections 18(d), 31(a), and 34(b) of the Investment Company Act of 1940 (Investment Company Act) and rule 31a-1 thereunder; that Imperato also violated Sections 13(b)(5) and 15(a) of the Exchange Act and rules 13b2-1, 13b2-2, and 13a-14 thereunder, and Section 34(b) of the Investment Company Act; and that O’Donnell violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC seeks permanent injunctions and civil penalties from each defendant, disgorgement with prejudgment interest from Imperiali and Imperato, and an officer and director bar against Imperato, and Fiscina.

Without admitting or denying the SEC’s allegations, Fiscina has consented to the entry of a final judgment that permanently enjoins him from future violations of Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2, and 13a-14 thereunder, and Section 34(b) of the Investment Company Act, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-11, and 13a-13 thereunder, and bars him from acting as an officer or director of a public company. The Fiscina final judgment does not impose a civil penalty against him based on his sworn inability to pay. The settlement is subject to the Court’s approval.”

AT CSK AUTO: COMPANY COOKS BOOKS AND CEO GIVES BACK PRIME RIB MAIN COURSE

RARE AND/OR WELL DONE!)
The following excerpt is from the SEC website:

“Washington, D.C., Nov. 15, 2011 –The Securities and Exchange Commission today announced that the former chief executive officer and chairman of CSK Auto Corporation has agreed to return $2.8 million in bonus compensation and stock profits that he received while the company was committing accounting fraud.
Maynard L. Jenkins of Scottsdale, Ariz., was not personally charged by the SEC for the company’s misconduct, however he is still required under Section 304 of the Sarbanes-Oxley Act (SOX) to reimburse CSK Auto for incentive-based compensation and stock sale profits that he received during the company’s fraudulent period. The SEC filed court papers against Jenkins in July 2009 saying he violated the SOX “clawback” provision by failing to reimburse the company. It marked the agency’s first SOX clawback case against an individual who was not alleged to have otherwise violated the securities laws.
"CEOs should know that they can be deprived of bonuses or stock profits they received while accounting fraud was occurring on their watch," said Robert Khuzami, Director of the SEC's Division of Enforcement.
Rosalind Tyson, Director of the SEC’s Los Angeles Regional Office, added, “Jenkins received incentive-based pay while CSK Auto was fraudulently overstating its income to shareholders. His bonuses and stock profits are now being rightfully returned to the company for the benefit of the shareholders.”
The settlement with Jenkins is subject to court approval. Jenkins has agreed to reimburse $2,796,467 to O’Reilly Automotive Inc., which has since acquired CSK Auto.
The SEC previously charged four former CSK Auto executives who perpetrated the accounting fraud, and separately charged the company for filing false financial statements for fiscal years 2002 to 2004. The company settled the charges, and the litigation against three of the former executives is continuing (CSK’s former chief operating officer has since died). The U.S. Department of Justice brought a criminal indictment against those same executives, who have pleaded guilty to various charges. CSK Auto recently entered into a non-prosecution agreement with the DOJ in which it agreed to pay a $20.9 million penalty.
The SEC’s investigation was conducted by Dabney O’Riordan, Robert Conrrad, Rhoda Chang, Spencer Bendell, and Lorraine Echavarria in the Los Angeles Regional Office. The litigation effort was led by Donald Searles.
The SEC thanks the Department of Justice, Federal Bureau of Investigation, Internal Revenue Service, and U.S. Postal Service for their substantial assistance in the investigation.”