Friday, December 17, 2010
Vitesse Semiconductor Corp's co-founder and former CEO Louis Tomasetta and former CFO and Executive Vice President Eugene Hovanec face civil fraud charges from the SEC (Securities and Exchange Commission) that allege perpetration of "fraudulent and deceptive schemes."
According to the SEC, action was taken during 1995 to April 2006 to inflate revenue from shipment of Vitesse's products and to backdate stock options to employees and officers by failing to record millions of dollars of compensation expense.
The SEC document filed Friday noted charges against the two former executives, as well as former Controller and CFO Yatin Mody, former Manager and Director of Finance Nicole Kaplan, and the company itself. However, Vitesse has settled the matter by agreeing to be permanently enjoined and to pay a $3 million civil penalty. Vitesse noted that the recommended settlement was agreed to in June 2009 and is now finalized. With the payment, the SEC concludes its investigation of Camarillo, Calif-based Vitesse.
Further, Mody and Kaplan have each agreed to a bifurcated settlement that provides they will be permanently enjoined and ordered to pay disgorgement, and that any civil penalty will be determined later by the district court. Mody has also agreed to be permanently barred from serving as an officer or director of a public company, the SEC said.
While the SEC's case against Tomasetta and Hovanec is contested, settlements for Vitesse, Mody, and Kaplan come without admitting or denying the allegations in the complaint.
Specifically, the SEC alleged that Vitesse, through the former senior executives, engaged in revenue recognition fraud from 2001 to 2006 and that Tomasetta and Hovanec orchestrated options backdating from 1995 to 2006.
Vitesse terminated the employees in May 2006, a year in which several electronics industry companies and executives faced backdating charges and fraud allegations from the SEC.
Separately, the United States Attorney's Office for the Southern District of New York Friday filed criminal charges against Tomasetta and Hovanec, and announced that Mody and Kaplan have pleaded guilty to criminal charges.
By: DocMemory
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