SEC Charges Executive Of Florida Company In Multi-Year Accounting Fraud Scheme
On June 2nd, 2022, the Securities and Exchange Commission (SEC) issued a litigation update in the case of the Securities and Exchange Commission v. Anthony Sirotka. The former CAO and President of a company called FTE Networks, Inc, Mr. Sirotka is facing accounting fraud charges. Two other former executives at the company have already previously been charged with securities law violations. Here, our Miami investment fraud lawyer discusses the litigation update from the SEC.
SEC Complaint: FTE Networks, Inc. Misrepresented its Revenue
FTE Networks, Inc. is a network infrastructure company that had its primary headquarters in Naples, Florida. Anthony Sirotka was the company’s President and Chief Administrative Office (CAO). Two Florida men—Michael Palleschi and David Lethem —were high ranking executives of the company who have also been implicated in the securities fraud case.
As a public company, federal securities law required FTE Networks, Inc. to submit financial reports to the SEC. Among other things, these reports include financial statements that must accurately reflect the true financial position of the company. The SEC contends that FTE Network fundamentally misrepresented its revenue and receivables between 2016 and 2018—thereby materially misleading investors.
The Company Claimed $12.5 Million in Revenue Over a Three-Year Period
According to the documents received and reviewed by the SEC, FTE Networks, Inc. claimed that it took in approximately $12.5 million in revenue between early 2016 and late 2018. The company also claimed a large amount of “unbilled” work for future projects in its receivable projects. An investigation by the SEC determined that the company’s revenue was overstated by more than 100 percent and its receivables were overstated by nearly 500 percent. In other words, the SEC is charging that the company claimed a significant amount of false revenue in order to make it appear as if it was in a better financial position.
The SEC is Seeking Sanctions and Remedies
Public companies must make accurate and comprehensive financial disclosures in accordance with the law. When they fail to do so, they can put investors at serious risk. The SEC takes accounting fraud and securities law violations very seriously. The agency contends that Anthony Sirotka, Michael Palleschi and David Lethem all acted to carry out the corporate fraud scheme. The SEC is now seeking all appropriate sanctions and remedies in its Florida court case, including:
- Findings of violations of federal securities laws;
- A permanent injunction to stop further misconduct;
- Payment of civil financial penalties; and
- An officer and director bar for all individuals.
Get Help From Our Miami, FL Securities Fraud Attorney Today
At Carlson & Associates, P.A., we are effective advocates for the rights of investors. If you suffered serious financial losses due to corporate fraud, we are here to help you determine the best course of action. Give us a phone call today to request a private and comprehensive review of your case. With a legal office in Miami, our attorneys represent investors in South Florida and beyond.
Source:
sec.gov/litigation/litreleases/2022/lr25406.htm
