A pharmaceutical company already engaged in a long-term business relationship with an accounting firm, as part of its rebranding, brought on several new executives, including a chief financial officer. After learning that this client had not performed background investigations on these individuals, the accounting firm ordered due diligence investigations from SI.
Everything looked great with the chief financial officer: an MBA degree from a prestigious university was confirmed, as well as employment history in financial positions with large companies.
However, in digging deeper, SI’s investigation discovered that the subject, in his capacity of chief financial officer at a previous employer, had been named as a defendant in several federal lawsuits, including a civil complaint filed by the Securities and Exchange Commission which alleged that the subject falsified financial documents. The subject paid $50,000 in fines to the SEC without admitting or denying the charges and agreed to a permanent injunction. His CPA license was revoked, and he was expelled from the AICPA. The former employer was forced to restate its earnings which, in turn, resulted in a shareholders’ class-action lawsuit against the subject and the company. Unrelated to the securities matters, an open federal tax lien filed in 2008 for $469,500 against the subject was located in searches of his previous jurisdiction of residence.