InfoBytes Blog
SEC charges former senior executives of in-flight entertainment company
On December 18, the former CEO and CFO of U.S.-based in-flight entertainment company settled SEC charges that they knowingly violated books and records and internal accounting controls provisions of the federal securities laws and caused similar violations by the company’s parent company. As detailed in prior FCPA Scorecard coverage, the parent company and the entertainment company settled related FCPA charges in April and agreed to pay a combined $280 million to the DOJ and SEC.
The company’s former President and CEO and its former CFO consented to the entry of their administrative orders without admitting or denying the findings and agreed to pay penalties of $75,000, and $50,000, respectively.
The SEC alleged the former CEO authorized the use of a third-party to pay more than $1.76 million to several consultants who provided little to no services. One of these consultants, a Middle East government official, was paid $875,000 to help secure over $700 million in business from a state-owned airline, but the position “required little to no work.” The bribery scheme involving this foreign official was previously described in the DPA with DOJ and the SEC Settlement Order. The former CEO was also charged with making false representations to the company’s auditor regarding internal accounting controls, and books and records.
The SEC charged the former CFO in connection with a backdating scheme that resulted in the parent company improperly recording $82 million in revenue. The former CFO was charged with making false representations to the company’s auditor regarding the company’s financial statements, internal accounting controls, and books and records. The order against him suspends him from appearing or practicing before the Commission as an accountant for at least five years.
The former CEO and CFO were previously described in the SEC Settlement Order as the company's Executive 1 and the company's Executive 2, respectively. The DOJ has not brought any criminal charges against any individuals in this matter.