The US Securities and Exchange Commission is suing William G. Mortenson with Texas securities fraud related to an alleged revenue scheme that allowed him to maintain an expensive lifestyle. According to the SEC, the former chief financial officer of Advanced Materials Group Inc. fraudulently inflating the company’s financial results in 2008 and 2009. AMG is now in bankruptcy protection fired Mortenson in 2009.
In addition to the charges of Texas financial fraud charge and misappropriating hundreds of thousands of dollars from AMG, The SEC is accusing Mortenson of falsifying records, lying to accountants, circumventing internal controls, and aiding and abetting violations involving reporting, internal control, and record-keeping. The SEC claims that Mortenson instructed employee Feng “Eric” Zheng to document bogus sales to two of the company’s biggest customers. The entries materially overstated AMG’s sales, accounts receivable, and earnings as they were then reported in quarterly and annual reports.
Mortenson allegedly used the inflated accounts receivable to borrow money under the company’s bank line of credit. He is accused of misappropriating the money, as well as other funds, to cover up to $380,000 in personal expenses, including property tax, country club membership, private jet flights to Europe, family vacations, and home remodeling. The SEC is asking the U.S. District Court for the Northern District of Texas to order civil penalties, an officer/director bar, disgorgement, and permanent injunctive relief against Mortenson.
Meantime, Zheng has settled charges regarding his alleged involvement in the Texas securities scam for $25,000. He was accused of falsifying records, lying to accountants, circumventing internal controls, and aiding and abetting violations of recordkeeping, reporting, and internal controls.
Related Web Resources:
SEC sues ex-president of Garland-based Advanced Materials Group, Dallas News, June 10, 2010
SEC Charges Former Advanced Materials Group, Inc. CFO with Securities Fraud and Misappropriation of Hundreds of Thousands of Dollars, SEC.gov, June 9, 2010
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