The Securities and Exchange Commission today announced charges against the former Chief Financial Officer, Edward O’Donnell, and the former Chief Commercial Officer, Victor Bozzo, of New York-based telecommunications company Pareteum Corp. for engaging in fraudulent revenue recognition practices. The SEC also announced settled charges against Pareteum’s former Controller, Stanley Stefanski, for his role in the scheme. Pareteum previously settled to accounting and disclosure fraud charges filed by the SEC in 2021 and filed for bankruptcy in 2022.
According to the SEC’s complaint, from at least 2018 through mid-2019, Bozzo, O’Donnell, and Stefanski engaged in a fraudulent scheme to recognize revenue from Pareteum customers’ non-binding purchase orders for SIM card services, despite knowing that the customers had not committed to paying for the services unless they were able to sell the services to downstream consumers. The SEC’s complaint also alleges that, because of these executives’ misconduct, Pareteum improperly recognized revenue for the purchase orders before the SIM cards were shipped to the customers. This improper revenue recognition scheme allowed Pareteum to materially overstate its revenue by $12 million – or 60 percent – for fiscal year 2018 and by $27 million – or 91 percent – for the first and second quarters of 2019 combined in its financial statements filed with the SEC.
Source: SEC.gov | SEC Charges Former Pareteum Executives with Accounting and Disclosure Fraud
