Energy Firm Reaches Settlement in Accounting Fraud Case
Nov 25, 2016
New York, NY(Law Firm Newswire) November 25, 2016 – The Securities and Exchange Commission (SEC) filed an accounting fraud lawsuit against Lime Energy Co. and four of its former employees in Manhattan federal court.
The SEC accused the company and its executives of improperly recognizing $20 million in revenue sooner than permitted in order to reach internal revenue targets. Lime Energy, an energy services provider, will pay a $1 million settlement. None of the former executives admitted or denied the allegations. However, they all agreed to settlements.
“Reporting false revenue is a serious charge for corporate employees as it involves manipulating financial information to mislead public shareholders,” said Peter Brill, a New York City criminal defense attorney with Brill Legal Group, who is not involved with the case. “Anyone facing accounting fraud charges should consult an experienced attorney as such cases require solid legal representation.”
The SEC launched an investigation into Lime Energy’s financial reporting and revenue recognition procedures in 2012. Officials found that in 2010 former Operations Vice President Joaquin Alberto Dos Santos Almeida and ex-Operations Director Karan Raina began booking millions of dollars in revenue on newly acquired contracts earlier than permitted by accounting regulations.
The two former utilities department executives pursued the early booking of revenue more aggressively from 2011 to 2012 amid growing pressure to yield results. They later told company accountants to recognize revenue on nonexistent contracts, the SEC alleged.
In addition, Lime Energy’s former Corporate Controller Julianne M. Chandler received new accounting entries to recognize millions of dollars in revenue even after the 2011 year-end close. In February 2012 former Executive Vice President James G. Smith gave Chandler additional accounting entries to improperly book as the company was $500,000 short of its 2011 revenue target.
Smith and Chandler both received a five-year ban from practicing as accountants of publicly traded companies. They must also pay penalties of $50,000 and $25,000 respectively. Almeida has been permanently prohibited from serving as an officer while Raina will pay a $50,000 penalty, the SEC said.
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