U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22856 / October 28, 2013
Accounting and Auditing Enforcement Release No. 3510 / October 28, 2013
Securities and Exchange Commission v. Paul V. Greene, Civil Action No. 1:12-CV-00119 (JEB/JMF) (D.D.C.)
SEC Obtains Permanent Injunction and $100,000 Civil Penalty Against Cellular Telephone Company President for Role in Fraudulent Scheme
The Securities and Exchange Commission today announced that on October 24, 2013, the Honorable James E. Boasberg, United States District Judge for the District of Columbia, entered a final judgment against defendant Paul V. Greene, President of privately-held Americas Premiere Corporation (APC), a former vendor of InPhonic, Inc. (InPhonic), a now-bankrupt online retailer of cellular phones. The final judgment permanently enjoins Greene from violating the antifraud, books and records and reporting provisions of the securities laws and orders him to pay a $100,000 penalty.
According to the Commission's complaint, starting in the third quarter of 2005, and in each quarter of 2006, Greene and Len A. Familant, then an InPhonic Senior Vice President, engaged in a series of undisclosed "round-trip transactions" to help InPhonic artificially inflate its financial results. After the end of the quarters, but before InPhonic publically reported its financial results, Familant obtained APC credits from Greene. At the same time, however, Familant and Greene entered into an oral side agreement under which InPhonic would repay the credits through future purchases of certain cell phone models at inflated prices and by paying for inflated and fake repairs. The complaint further alleges Greene hid the scheme from InPhonic's independent auditors even after APC's accountant had informed Greene that APC's sham credit transactions with InPhonic were illegal. InPhonic improperly recorded a total of almost $10 million in credits from APC as a decrease in cost of goods sold, which allowed InPhonic to materially understate its losses and meet its quarterly and annual financial targets in reports filed with the Commission. A final judgment against defendant Len Familant was previously entered by the Court.
Without admitting or denying the allegations in the Commission's complaint, Greene consented to the entry of the final judgment permanently enjoining him from violating the antifraud provisions, Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5(a) and (c), and books and records provision, Exchange Act Rule 13b2-1, and aiding and abetting violations of Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5(a) and (c), books and records provision, Section 13(b)(2)(A) of the Exchange Act, and reporting provisions, Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13, and ordering him to pay a $100,000 civil penalty.
For further information, please see Litigation Release No. 22237 (January 25, 2012).