The U.S. Securities and Exchange Commission accused three former executives of Syntax-Brillian Corp. of booking fake sales of high-definition televisions in China to artificially inflate the firm’s earnings.
James Li, who served in various executive roles at Tempe, Arizona-based Syntax, and former chief procurement officer Thomas Chow used phony shipping and sales documents to funnel millions of dollars from 2006 to 2008 through a Taiwan-based manufacturer and a purported customer in Hong Kong, the SEC said in a statement today. Li agreed to pay a $100,000 penalty and other sanctions to be determined by U.S. District Court in Arizona, and the lawsuit against Chow continues, the SEC said.
Wayne Pratt, Syntax’s former chief financial officer, agreed to pay more than $200,000 to resolve claims he ignored red flags about the improper accounting, according to the statement. The SEC also sanctioned two executives at the Taiwan-based manufacturer, the agency said.
Syntax filed for bankruptcy under Chapter 11 in 2008, citing the high cost of goods, a complicated ownership structure and pending litigation. The firm has also been investigated by a task force with personnel from the Justice Department, Internal Revenue Service and Postal Inspection Service.
In settling the claims, Li and Pratt didn’t admit or deny wrongdoing. A phone call to Pratt wasn’t immediately returned. A person answering a number listed for James Li in San Jose, California, hung up without responding to questions. A phone number for Thomas Chow couldn’t immediately be located.