SEC Charges Lime Energy for Accounting Fraud
The Securities and Exchange Commission charged energy services provider Lime Energy (OTC:LIME) with accounting fraud, singling out four of its executive members for their involvement in the offense. Lime Energy has agreed to pay $1 million to settle the charge. As quoted in the press release: The SEC’s complaint alleges that Lime Energy improperly recognized … Continued
The Securities and Exchange Commission charged energy services provider Lime Energy (OTC:LIME) with accounting fraud, singling out four of its executive members for their involvement in the offense. Lime Energy has agreed to pay $1 million to settle the charge.
As quoted in the press release:
The SEC’s complaint alleges that Lime Energy improperly recognized $20 million in revenue from at least 2010 to 2012. Two then-executives in the company’s utilities division – vice president of operations Joaquin Alberto Dos Santos Almeida and director of operations Karan Raina – developed procedures to enable the company to recognize revenue on newly signed contracts based on documentation received before year-end 2010. But when documentation did not arrive in time, they allegedly went ahead and booked the revenue anyway.
The SEC further alleges that Lime Energy’s then-corporate controller Julianne M. Chandler accepted new accounting entries to book millions of dollars in additional 2011 revenue well after the year-end close. And in February 2012 when Lime Energy still needed $500,000 to meet its 2011 revenue target, the company’s then-executive vice president James G. Smith suddenly sent Chandler new entries that provided the company with even more additional revenue to improperly recognize.
The SEC’s complaint was filed in U.S. District Court for the Southern District of New York, and the settlements are subject to court approval. Smith agreed to pay a $50,000 penalty and be barred from serving as an officer or director of a public company for five years. Chandler agreed to a $25,000 penalty and a five-year officer-and-director bar. Almeida agreed to a permanent officer-and-director bar, and Raina agreed to a $50,000 penalty. They neither admitted nor denied the allegations.
The SEC’s investigation found no personal misconduct by Lime Energy’s then-CEO John E. O’Rourke and then-CFO Jeffrey R. Mistarz, who reimbursed the company $67,728 and $118,196.01 respectively for cash bonuses and certain stock awards they received during the period when the company committed accounting violations. Therefore it wasn’t necessary for the SEC to pursue a clawback action under Section 304 of the Sarbanes-Oxley Act of 2002.