An energy services provider and four of its former executives has settled Securities and Exchange Commission charges of taking part in an accounting fraud scheme that booked tens of millions of dollars in improper revenue, some from non-existent accounts, over a two-year span.
Without admitting or denying the allegations, Lime Energy Co. agreed to pay $1 million to settle a civil complaint filed in federal court this week. The SEC charged the firm with improperly recognizing $20 million from 2010 to 2012 to meet internal revenue targets.
The complaint alleges that former vice president of operations Joaquin Almeida and director of operations Karan Raina recognized newly signed contracts in 2010, even though the proper documentation had not been received by year-end. Facing increased pressure to produce results, the duo directed internal accountants to book revenue for nonexistent jobs in 2011 and 2012, according to the SEC.
“Lime Energy and its then-executives engaged in a wide array of wrongdoing, including the improper reporting of a significant amount of fake revenue,” said Scott Friestad, SEC’s associate director of the division of enforcement.
The SEC also charged then-corporate controller Julianne Chandler with booking millions of dollars in new revenue well after the 2011 year-end close. With the company $500,000 short of year-end targets, former executive vice president James Smith allegedly provided Chandler with more entries, as late as February of 2012, that provided additional revenue.
“The desire to meet earnings or revenue targets cannot override corporate officers’ responsibilities to public shareholders to assure that the company’s accounting reflects financial reality,” Friestad said.
Smith and Chandler agreed to pay $50,000 and $25,000, respectively, and serve a five-year ban as an officer on a publicly traded company. Almeida agreed to a permanent officer-and-director bar, and Raina agreed to a $50,000 penalty. All four former executives neither admitted nor denied wrongdoing.
“This settlement brings a close to a chapter that Lime Energy put behind us several years ago,” said Lime Energy CEO Adam Procell, “a matter in which no current Lime Energy employees were involved.”
The company’s former CEO and CFO, John O’Rourke and Jeffrey Mistarz, were not charged with personal misconduct. They reimbursed the company $67,728 and $118,196.01, respectively, for cash bonuses and stock awards received during the two-year period.