AgFeed to Pay $18 Million Over Fake Revenue in ChinaNeil Weinberg
AgFeed Industries Inc. agreed to pay $18 million to settle a U.S. regulator’s allegations that the company reported fake revenues in China to meet financial targets and prop up its stock price.
The accord resolves a Securities and Exchange Commission lawsuit filed in March, in which the agency accused AgFeed of reporting $239 million of bogus revenues. The SEC said the Tennessee company’s Chinese business inflated the number and weight of hogs it sold to try to show strong growth.
“This settlement holds AgFeed accountable for its accounting fraud and deprives the company of ill-gotten gains,” Julie Lutz, director of the SEC’s Denver regional office, said in a statement today.
The fraud began in 2008 when AgFeed bought 29 Chinese farms and lasted until 2011, according to the SEC. AgFeed, based in Hendersonville, Tennessee, is now bankrupt. Settling the investigation provides the “most expedient and effective” way to return money to the victims of its fraud, Lutz said.
AgFeed didn’t admit or deny the allegations, the SEC said in its statement. William Baker, an attorney for the company, didn’t immediately return a phone call seeking commit.
The $18 million will be distributed to AgFeed investors, the SEC said. The agency said it’s still pursuing cases against five former AgFeed executives and the former chairman of its audit committee.